Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

BRITISH TRANSPORT DOCKS BILL

Order for Third Reading read.

Queen's Consent, on behalf of the Crown, signified.

Read the Third time and passed.

FOYLE AND LONDONDERRY COLLEGE BILL [Lords]

HOVE BOROUGH COUNCIL BILL [Lords]

Read a Second time and committed.

CROMARTY PETROLEUM ORDER CONFIRMATION

Mr Millan presented a Bill to confirm a Provisional Order under Section 8 of the Private Legislation Procedure (Scotland) Act 1936, relating to Cromarty Petroleum; and the same was read the First time; and ordered to be read a Second time upon Wednesday 30th June and to be printed. [Bill 167.]

Oral Answers to Questions — EMPLOYMENT

Industrial Disputes

Mr Terry Walker: asked the Secretary of State for Employment how many workers were involved in industrial disputes in the first four months of 1976 compared with the first four months of 1975.

Mr. Cryer: asked the Secretary of State for Employment how many working days were lost because of industrial disputes in the first four months of 1976 compared with the first four months of 1975.

Mr. Flannery: asked the Secretary of State for Employment how many stoppages of work because of industrial dispute occurred in the first four months of 1976 compared with the first four months of 1975.

Mr. Woodall: asked the Secretary of State for Employment how many stoppages of work because of industrial dispute occurred in the first four months of 1976 compared with the first four months of 1975.

The Secretary of State for Employment (Mr. Albert Booth): Provisional estimates show that 625 stoppages due to disputes began in the period January to April 1976 compared with 905 in the same period in 1975, that 249,800 workers were involved in all stoppages in progress in this period compared with 349,500 in the same period in 1975, and that 1,188,000 working days were lost compared with 2.106,000 in the same period in 1975.

Mr. Walker: Will my right hon. Friend appreciate that those figures are encouraging? Can he tell us how these figures compare with some of our industrial competitors?

Mr. Booth: International comparisons are difficult and can sometimes be misleading, but the general tendency in industrial countries is that they have an increasing number of days lost due to disputes, and our figures are considerably better than those of the United States of America, Canada, Australia and Italy.

Mr. Cryer: Does my right hon. Friend agree that these figures represent a success for the policy of conciliation rather than confrontation? This takes us back to the level of stoppages in 1967 before successive Governments produced legalistic nonsense for binding the trade union movement. Does he also agree that, in order to retain the good will and support of the trade union movement, urgent action must be taken over the level of unemployment, including urgent consideration of matters like selective import controls, particularly in areas such as the textile industry, and more investment by the National Enterprise Board to create jobs?

Mr. Booth: I would say to my hon. Friend that certainly the number of days lost in this period are lower than at any time since 1968. As to the cause, I would agree with him to the extent that a very large measure of it is due to attempts at conciliation by the work of the Advisory, Conciliation and Arbitration Service. I would also say that it is partly due to pursuing industrial relations policies as well as our policy of consensus and co-operation rather than of confrontation and legal intervention. However, part of the overall relationship with the trade union movement must involve the other factors that my hon. Friend has raised. I would agree that they are most important.

Mr. Madel: Can the Secretary of State say whether the Advisory, Conciliation and Arbitration Service is doing an industry-by-industry survey to see whether disputes procedures should be improved? There are many manufacturing industries in which improvements really ought to be made so that the procedure is used before there is a stoppage.

Mr. Booth: It is certainly within the scope of ACAS to look at procedures used for the conciliation of disputes within industry, and its general remit is to urge people to use their own procedures before coming to ACAS. My Department has recently published a record of the outcome of our inquiry into the level of strikes in this country, and on examining that I might take up the point raised by the hon. Gentleman in respect of ACAS to see whether there is a rôle for an industry-by-industry examination.

Mr. Flannery: Does my right hon. Friend accept that the answer he gave initially was very encouraging? Does he further agree that unemployment is a new and terrible discipline which is now descending upon a vast number of working people? Far more time and production is lost by unemployment than by all the strikes put together. Would my right hon. Friend accept that it really is time that something was done to prevent more and more massive unemployment from taking place?

Mr. Booth: Of course, one can enormously exaggerate the loss of production which results from strikes. Certainly much more production is lost by unemployment and much more is lost by industrial disease and injury as well. We have to tackle this question of unemployment irrespective of the industrial relations implications. Although there are improvements, some of the things which lead to unemployment can also lead to industrial disputes, and all of us would wish to see a reduction in industrial disputes as well as a great reduction in unemployment.

Mr. McCrindle: Is it not essential that the Secretary of State should compare the figures he has given this afternoon alongside the figures for unemployment during the same period? Does he not think that as unemployment rises strikes tend to fall? Can he tell the House what moral he draws from that?

Mr. Booth: I have certainly tried to make this comparison of the correlation between disputes and unemployment in respect of other periods of high unemployment, but there is no evidence of a comparable fall in industrial disputes. I have come to the conclusion that many things which have caused disputes are similar to the causes of unemployment, like strikes against attempts to bring about massive lay-offs and closures. I cannot accept that the number of disputes is in any way connected with the high level of unemployment.

Mr. Woodall: Does my right hon. Friend agree that these are most encouraging figures? Does he not think, however, that they are not just a flash in the pan but more of a long-term industrial strategy worked out between the Government and the unions?

Mr. Booth: I certainly do. They are not a flash in the pan even statistically, because the comparisons that we were making were with 1975, which was a year of low industrial dispute figures, particularly in the period of the year considered. As my hon. Friend has said, this owes much to the developing relationship which has improved industrial relations generally and made for greater national discussion of policies among the TUC, the Government and employers.

Mr. Hayhoe: Would the Secretary of State agree that all who have helped to achieve this improvement in industrial relations—this substantial reduction in the number of strikes—deserve our commendation and congratulations? By "all" I mean both sides of industry and the Advisory, Conciliation and Arbitration Service. Would he repudiate the over-simpliste interpretation which tends to praise trade unions when the number of strikes comes down but is not prepared to blame trade unions when the number of strikes goes up? Will he have another look at the correlation between the numbers of unemployed and the numbers of strikes, because my reading of numbers in the past is that there is some correlation?

Mr. Booth: I have given my views on the question of correlation, which I stand by, but this is not a matter for praise or blame of trade unions. I am ready to acknowledge that employers as well as unions were prepared to refer matters to ACAS in advance of ACAS being established as an independent statutory body. However, in the particular areas in which special responsibilities have been laid on ACAS there were some references by unions, some jointly by unions and employers and some by employers alone. But it is fair to say in defence of the general view of some of my hon. Friends as to the rôle of the trade unions that more came forward from the unions alone than from the other two sources put together.

Redundancy Payments

Sir J. Langford-Holt: asked the Secretary of State for Employment when the weekly wage of £80 was fixed as the maximum to be taken into account for assessing redundancy payments; and what that figure would now represent if calculated at current prices.

The Under-Secretary of State for Employment (Mr. John Golding): The limit of £80 was fixed by Order made on 31st July 1974 and became effective for dismissals occurring on or after 28th August 1974. It is estimated that approximately £112 would have been required in April 1976 to purchase goods valued at £80 in August 1974.

Sir J. Langford-Holt: As presumably at the time that this level was fixed it was deemed to be fair and therefore, by implication, it is not fair today, why has no review taken place? When will a review take place?

Mr. Golding: A review will take place during 1977 under the Employment Protection Act. The original figure was such as to include all but the top 3 per cent. of those receiving pay, excluding overtime. The present £80 does that except for the top 10 per cent. We believe that the time is not yet ripe for a review.

Textile Workers (Unemployment)

Mr. Madden: asked the Secretary of State for Employment what is the latest total of unemployed people in West Yorkshire whose last employment was in the textile industry.

The Under-Secretary of State for Employment (Mr. John Grant): At 13th May the total was 4,569.

Mr. Madden: Does my hon. Friend agree that, for the most part, this tragic toll of unemployed men and women are victims of unfair competition by foreign textile industries? Would he further agree that there is little point in applying sticking plaster to an industry which is bleeding to death? Will he therefore make representations to the Secretary of State for Industry asking for urgent and extensive import controls to be introduced? Secondly, will he take specific measures to assist the textile industries, which are suffering from additional problems of decline, since ways of boosting employment are urgently needed in these areas, which are suffering very badly?

Mr. Grant: My hon. Friend knows that the present coverage of import restraints for the textile industry as a whole has never been wider. I think he also knows the Government's views about the


difficulties of widespread and non-selective controls and the fears of retaliation. However, I shall certainly draw his remarks to the attention of my right hon. Friend, the Secretary of State for Industry. I think that my hon. Friend is to meet the Minister of State at that Department in the near future to discuss these matters.

Mr. Viggers: Has the Minister made an estimate for national unemployment in the coming months and years? If so, will he share it with the House and the country?

Mr. Grant: I do not think that that arises on this Question.

Mr. Noble: Does my hon. Friend accept that the situation in the cotton and allied fibres industry in the North-West is at least as bad as that in West Yorkshire and that in industries employing a large number of women the unemployment figures tend to be understated? Will he take note of the point made by my hon. Friend the Member for Sowerby (Mr. Madden) about import controls, particularly the point that, although we have wide and all-embracing controls, they are so high that they make no damned difference?

Mr. Grant: I certainly share my hon. Friend's anxiety about the North-West, but I have already answered the question about import controls. Despite what my hon. Friend says, I should not have thought it was true to say that they are having no effect at all. I think that they are having a substantial effect.

Mr. Joseph Dean: Is my hon. Friend aware that all the people involved in the industry—employers and unions—believe that the present import controls, although they have been extended, still fall far short of being adequate to deal with the problem and that when they are imposed they are far too little and far too late to be effective? The stuff is already here before action is taken.

Mr. Grant: I cannot add to what I have said, except to repeat that I will certainly draw my right hon. Friend's attention to what has been said today.

Training Board Levies (Small Businesses)

Mr. David Mitchell: asked the Secretary of State for Employment whether he will ensure that exemption for small businesses from training board levies moves in line with the movement of wages in those industries in which the exemption is based upon the total of wages paid annually.

Mr. Golding: I am informed by the Manpower Services Commission that this factor is always taken into account where the exemption level for small businesses is based on the total of emoluments paid. It is not, however, the only factor influencing the level of exemption.

Mr. Mitchell: Is the hon. Gentleman aware that between 1974 and 1975 levy exemption was raised by 17·3 per cent. but that in the same period wages rose by 25·5 per cent., so that there is a substantial lag? Will he draw that factor to the attention of the Manpower Services Commission? Secondly, what are the other factors to which he has referred?

Mr. Golding: I will draw the attention of the Commission to the facts that the hon. Gentleman draws to our notice. The other factors include the extent of the training needs in the particular industries, the ability of the training boards to provide service to small businesses and the cost effectiveness of providing a service to small firms.

Mr. Dalyell: Does not the ability to provide services vary vastly from one area to another? Could the less good areas be brought up to the standard of the best?

Mr. Golding: We hope to achieve a uniform standard throughout the United Kingdom, but certainly this is a matter which the Manpower Services Commission and the training boards will take into account.

Mr. Hayhoe: Does the hon. Gentleman appreciate that small businesses have been clobbered in a variety of ways by actions of the present Government and that some easement in this area would be very helpful?

Mr. Golding: The Government leaves it to the industrial training boards and the Manpower Services Commission to work out the needs of particular industries. That policy will continue.

School Leavers

Mr. Bulmer: asked the Secretary of State for Employment what plans he has to improve job prospects for school leavers during 1976.

Mr. Golding: The Government have already taken a large number of measures, including the job creation programme, the recruitment subsidy for school leavers, additional resources for training, Community Industry and the careers service to deal with unemployment among school leavers and other young people. These measures are under review, especially in the light of yesterday's debate on youth unemployment.

Mr. Bulmer: Will the Minister confirm that this country is currently short of certain vital industrial skills and is likely to remain so? Will he consider publishing a list of those skills with a view to allowing employers who took on and trained school leavers to approve standards to recover the cost of that training in full?

Mr. Golding: This question will be discussed in the consultative document, which, as my right hon. Friend the Secretary of State announced yesterday, will be published shortly for consultation.

Mr. George Grant: When my hon. Friend reviews job prospects for school leavers, will he ask the Home Secretary why many police authorities have discontinued police cadet training? Would he agree that the money spent on police cadet training is money well spent? It is good training for a good job and is in the best interests of the nation.

Mr. Golding: I will draw this matter to the attention of my right hon. Friend the Home Secretary.

Mr. Peter Walker: In view of the high level of unemployment in the West Midlands, particularly among school leavers, why are the Government trying to stop firms from going to the West Midlands?

Mr. Golding: My understanding is that the Government have relaxed the industrial development certificate provisions

and that this relaxation has been most helpful in the West Midlands.

Mr. Litterick: Is my hon. Friend in a position to respond to the question which I put to the Secretary of State last night? Will he undertake to set in train discussions between his own Department and the Department of Education and Science, or between the Training Services Agency and the local education authorities, so that TSA resources can be put at the disposal of local education authorities to enable them to provide vocational courses for young people? If this were done, it would also take up the slack in the employment of teachers.

Mr. Golding: Before I came into the Chamber this afternoon I had the pleasure of reading in Hansard my hon. Friend's remarks of last night. I also noted the categorical assurances given by my right hon. Friend the Secretary of State. This is a matter which is being studied.

Mr. David Hunt: Although the Government survived last night's vote, we heard this morning that 122,905 school leavers are unemployed. There are many hon. Members on all sides of the House who are not prepared to sit back and watch young people's hopes and ambitions being frustrated. What are the Government going to do?

Mr. Golding: We dealt with this matter very fully in the debate yesterday. We gave categorical assurances that the Government would deal with the problem as urgently as possible.

Hon. Members: When?

Mr. Hayhoe: Does the Minister accept that today's figures are very alarming? Seasonally-adjusted figures for the number of vacancies notified, which cover young people and others, indicate a very serious trend. Will the Government look at these figures with a greater sense of urgency and a greater sense of concern?

Mr. Golding: There could be no greater concern than that which is felt on this Bench at the figures published this morning. One of the additional problems is the fact that the school leaving date was brought forward and employers have not yet adjusted to this in their recruitment measures.

Mr. Peter Morrison: asked the Secretary of State for Employment how many jobs are at present available which would be suitable for school leavers.

Mr. Golding: 27,719 unfilled vacancies were held by careers offices on 4th June. These include many which would be suitable for school leavers, but it is expected that some employers will not notify vacancies specifically for school leavers until later this summer.

Mr. Morrison: Is the Minister aware that that answer—and, indeed, all the others he has given this afternoon—will give absolutely no hope to the unemployed school leavers? Is he further aware that the best way to help them would be to abandon the Price Code, thus allowing employers to take on school leavers while at the same time seeing a return on their investment?

Mr. Golding: I think that it will be some encouragement—although the situation is still bad—that the number of unfilled vacancies has increased from 24,476 in April to 27,719 in June. The Government believe that a wide range of measures is needed, such as have been pursued in the past 12 months, to deal with this pressing problem.

Mr. Pavitt: Will my right hon. Friend have discussions with the Secretary of State for Social Services as a matter of urgency with a view to looking at the training and employment of school leavers in the professions supplementary to medicine? Is my hon. Friend aware that there is a grave shortage of speech therapists, physiotherapists and many other categories, and that we could do with a full long-term programme in order to fill those vacancies?

Mr. Golding: The Government will certainly look at the point made by my hon. Friend.

Health and Safety (Further Education Institutions)

Mrs. Wise: asked the Secretary of State for Employment if he will introduce legislation to extend the provisions of the Health and Safety at Work etc. Act 1974 to students in schools, universities and other institutions of further and higher education.

Mr. John Grant: I am advised by the Chairman of the Health and Safety Commission that schools, universities and other institutions of further and higher education are already covered by the Health and Safety at Work etc. Act. The interests of students are taken into account by provisions of the Act intended to protect the health and safety of other people who may be affected by the activities of an undertaking.

Mrs. Wise: Does my hon. Friend accept that it is not really satisfactory to cover the interests of students indirectly? It would be much fairer if the Act was extended to cover students directly. It is an anomalous situation that young people of the same age, who are handling the same substances and the same equipment, can be covered directly or indirectly according to whether they are technicians or students. Will my hon. Friend consider this matter, and discuss it with the National Union of Teachers and the National Union of students?

Mr. Grant: I take the point. The Health and Safety Commission has directed the Health and Safety Executive to study the conditions of work in schools, colleges and universities. We should await the report before making any preliminary judgments.

Retraining (Rural Areas)

Mr. Hicks: asked the Secretary of State for Employment whether he is satisfied that the opportunities for retraining of persons resident in rural areas are sufficiently adaptable to take account of the inherent geographical problems and specific job requirements in country districts.

The Minister of State, Department of Employment (Mr. Harold Walker): I am informed by the Manpower Services Commission that the Training Opportunities Scheme—TOPS—offers a wide scope of training to people in rural areas through the variety of its courses, the adaptability of its training to local needs, and its network of training establishments.
Training is available in skillcentres, colleges of further education and employers' establishments. TOPS facilities


have been greatly expanded and expansion is continuing. In addition, the Council for Small Industries in Rural Areas has embarked on an expansion programme designed to increase the range and scope of training which it provides in traditional rural crafts and other occupations.

Mr. Hicks: I am grateful to the Minister. Has he considered the concept of a mobile training and retraining unit, particularly in rural areas, offering a limited number of courses based on existing facilities such as local authority or educational workshops? This could be an extension of the evening-class concept in certain trades, crafts and skills.

Mr. Walker: I have not considered this matter, but it seems to be a useful and constructive suggestion. However, I see all sorts of difficulties in the way of it. Nevertheless, I shall draw it to the attention of the Training Services Agency.

Mr. Kenneth Lewis: Will the Minister accept that there are great difficulties for young people living in rural areas? They want to travel to the towns and cities to get jobs, but the bus services in rural areas do not allow them to go to distant places. Will the hon. Gentleman draw this to the attention of his right hon. Friend, or will he at least arrange for a subsidy for these young people's travelling expenses?

Mr. Walker: It is true that there are difficulties in rural areas where the population is too scattered to provide skill-centres, and there is a difficulty in travelling to the nearest town in which there is a college of further education. Lodging allowances and travelling allowances are available under the scheme to help these people, but I believe that there is some difficulty in the fact that adequate information is not always generally available.

Unemployed Persons

Mr. Stonehouse: asked the Secretary of State for Employment what is the number of unemployed and the percentage rate in the West Midlands and in England, Scotland, Wales and Northern Ireland, respectively, at the latest available date; and how he expects the situation to develop in each of these areas.

Mr. Booth: On 10th June 1976 the total number unemployed and the percentage rate of unemployment in the West Midlands was 127,148–5·6 per cent.; in England, 1,060,721–5·4 per cent.; in Scotland, 144,134–6·7 per cent.; in Wales, 73,796–7·2 per cent.; and in Northern Ireland 53,954–10·4 per cent.
I would expect falls in the current high levels of unemployment accompanying our recovery from the present economic recession to vary on an industrial rather than a geographical basis.

Mr. Stonehouse: Are not these the worst figures since before the war? For all their talk, the Government have failed. To what extent has the protection of jobs in Wales and Scotland worsened the employment position in England?

Mr. Booth: These are extremely bad figures; there is no denying that. I take the view that the development area policies of successive Governments have resulted in unemployment in Wales and Scotland in relation to other parts of the country being lower at this time than during any other slump. The recent measures that we introduced to alleviate unemployment were not confined to the development areas in recognition of the fact that there was an inordinately high level in other places.

Mr. Robinson: Referring to the point made earlier by the right hon. Member for Worcester (Mr. Walker), with unemployment in the West Midlands being above the national average, as it has been for some time, may I ask whether we may have a categorical assurance from my right hon. Friend that relaxation of industrial development certificate policy in the West Midlands will continue as industrial recovery gets under way and that firms which want to expand in the West Midlands will be able to do so?

Mr. Booth: I appreciate the way in which my hon. Friend has pursued this matter with me both from his constituency and in the House. I have looked into it most carefully. It is not the case, however, that jobs in the West Midlands are being hampered by the IDC policy. The situation is being helped now by greater flexibility. I am sorry to say that the causes of high unemployment in the West Midlands are to be found elsewhere and in areas which are possibly


more difficult to deal with than the IDC policy.

Mr. Henderson: Does the right hon. Gentleman agree that it is unfortunate that the figures should be produced on the day on which he has to answer Questions on the subject? The figure for Scotland, which is quite appalling, will be inflated in 10 days' time by 65,000 school leavers, who, if they do not obtain jobs, will increase our rate to about 10 per cent. Will the right hon. Gentleman answer the question which the Secretary of State for Scotland ducked in his reply to the debate last night? Will he tell those school leavers just what chance they have of getting a job in present circumstances?

Mr. Booth: On the timing of Questions, obviously I would have preferred a little longer to study the figures. I have, however, examined the position in Scotland against the current figures, and I have found that our manpower measures as of now are producing only about 18,000 jobs in Scotland. There is obviously a long way to go yet on the take-up of these measures.
As to the specific problem of school leavers, we anticipate that there must be a substantial increase in these projections of the number of unemployed school leavers in Scotland, and therefore we must do our utmost to see that we achieve this year what we achieved last year by special measures—a dramatic reduction in the number of unemployed school leavers.

Mr. Heffer: The IDC policy as such is not responsible for the level of unemployment in the West Midlands or anywhere else. The responsibility lies with the fact that our policies do not match up to the immediate needs of the situation. Will my right hon. Friend indicate to the House what measures the Government intend to take rather than give platitudes in dealing with this crisis?

Mr. Booth: I agree with the first part of my hon. Friend's analysis of the situation. In light of the figures I have announced, one is justified in saying that the measures taken to deal with the problem are not sufficient. Nevertheless, the West Midlands area has benefited not only from the Job Creation Scheme, the temporary employment subsidy and the

school leavers' recruitment subsidy, for which I am responsible to this House, but from measures taken by the Secretary of State for Industry to support the machine tool industry and the vehicle building industry. I contend, therefore, that against the worst economic recession the country has known since the 1930s we must go on to seek to develop more effective measures and a more effective policy. It is not the case, however, that we have not attempted to deal with the unemployment problem outside development areas.

Mr. Alexander Fletcher: Does the right hon. Gentleman appreciate that the Government's devolution proposals will increase competition for scarce jobs between one part of Britain and another? Will he explain how those proposals and policies will improve job prospects throughout the United Kingdom?

Mr. Booth: I must concede that I have been unable to make such an effective appreciation of the devolution proposals. However, I cannot on the evidence before me see how the proposals can aid the overall employment situation or the situation in individual countries within the United Kingdom to which they apply. They will, of course, raise the problem of how far individual national agencies dealing with economic measures can work effectively as opposed to a system in which some of the measures and policies are worked out in a co-ordinated manner on a United Kingdom basis.

Mr. Alan Lee Williams: Will my right hon. Friend indicate how the figures compare with those of France and Germany?

Mr. Booth: I cannot give the exact figures, but on the last comparison which I made the situation in those countries was comparable to ours, although in the case of France our position was slightly better.

Mr. Anthony Grant: Is the right hon. Gentleman aware that there is no evidence that under any Government, when an industrial development certificate is refused for a relatively small firm, the firm is likely to expand in a development area? Is he aware that it simply does not expand? Therefore, while I welcome the more flexible policy that the Secretary of State announced, I should


like to know why on earth the Government tightened the policy when they came to office.

Mr. Booth: I agree to the extent that one cannot conduct an IDC policy in isolation and one cannot expect that when a firm is refused an IDC for one location it will automatically move to another area which is aided. The decision to tighten up was taken in conjunction with other measures of special help to development areas. One of the actions we have taken, recognising the problem now, is to permit the replacement of factories which have fallen out of use in some of those areas, including the West Midlands, and we believe that this can be of much more assistance than the IDC policy.

Mr. Prior: Is the right hon. Gentleman aware that the whole House will regard these figures as extremely grave? Is he aware that, whereas the figures in other countries are now improving, our figures are getting worse? Does that not reinforce the need for a change in economic policy, although not the change indicated by the Secretary of State? Does he accept that the best way to get industry moving and to reduce the unemployment figures will be to change economic policy so that the Government are seen to be supporting private industry and private investment, in which case the country could feel confidence enough to invest, which it is not doing now? Is he aware that when we get the investment we shall get the jobs?

Mr. Booth: Since the Government are advocating a change of industrial strategy and economic policy I must, of course, agree with the right hon. Gentleman that there is a need for change. As for the comparisons with other countries, it is true that they are improving their position. Some of them have a great deal of room for improvement compared with Britain. In Belgium, for example, the seasonally-adjusted figure is 8·6 per cent. In Canada it is 7·4 per cent. and in the United States it is 7·3 per cent. I agree that the French figure has fallen, but against these considerations is the fact that there was a substantial increase in Government expenditure here to deal with the problems, particularly of employment. We believe that to be justified and we

believe that it has held our figures at a lower level than those in many comparable industrial countries through a year of deep economic depression.

Training Opportunities

Mr. Watkinson: asked the Secretary of State for Employment what further plans he has for expanding training opportunities in industry.

Mr. Harold Walker: In February my right hon. Friend the Chancellor of the Exchequer announced that an extra £55 million would be made available this year to provide additional training. I am informed by the Manpower Services Commission that financial support for up to 35,000 training places for new entrants in 1976–77—including over 26,000 extra places—has already been offered to industrial training boards. The MSC and the Government jointly will shortly be publishing a consultative document putting forward, without commitment, a possible scheme of collective funding for initial training in transferable skills in selected occupations.

Mr. Watkinson: I thank my hon. Friend for that reply. Does he accept that it is now an observable fact that in each succeeding business cycle the level of unemployment increases? Therefore, is it not now necessary to place industrial training in the absolute forefront of our industrial life? Will my hon. Friend observe the success which the Swedes have had in maintaining a low level of unemployment through industrial training, and will he seriously consider imposing a substantial general training levy on all firms?

Mr. Walker: My hon. Friend was correct in his opening reference to a discernible tendency towards higher unemployment. I think he recognises that the Government have indicated their commitment to an expansion of training by the significant extra sums of money they have made available for the purpose and the large increase in the number of skillcentre places available, in addition to the extra that we have provided for industry itself. Certainly there is a benefit in looking, as we have done, at the range of labour market policies which have been used in Sweden. The Swedes have applied not merely training but a whole range of policies.

Mr. Marten: In country towns which have industry but which are often quite a long way from retraining facilities, should we not encourage local authorities, local business men and local education interests to get together with industry to "do their own thing" much more in retraining unemployed people?

Mr. Walker: The hon. Gentleman will know that in respect of local government itself there is a local government training board run by the local authorities. I think that the arrangements that the Government have through the Manpower Services Commission and the Training Services Agency are sufficiently flexible to allow them to take into account the need of particular localities and the views and contribution that individual employers and authorities can make. But certainly what the hon. Gentleman has said deserves reflection.

Mr. Bryan Davies: Bearing in mind the deplorable record of British industry with regard to day release, what steps is my hon. Friend taking to ensure that, as the profitability of manufacturing industry increases, the record of day release of trainees will also improve?

Mr. Walker: Certainly, I think we would welcome any increase in facilities for day release, but my hon. Friend will realise that this is primarily a matter for my right hon. Friend the Secretary of State for Education and Science.

Trade Union Membership (Closed Shop)

Mr. Gow: asked the Secretary of State for Employment how many employees have been dismissed for refusing to join a trade union since 1st January 1976; and whether he is satisfied with the operation of the Trade Union and Labour Relations Act so far as the closed shop is involved.

Mr. Harold Walker: The information requested in the first part of the Question is not available. The answer to the second part of the Question is "Yes".

Mr. Gow: But does not the Minister think that he ought to obtain that information? Ought not the Government to take steps to protect the livelihood of those individuals, many of whom have given a lifetime of service to an industry

and who are now being dismissed for no other reason than that they wish to exercise their right of free conscience?

Mr. Walker: The Government have no power to obtain the information that the hon. Member seeks. I am not sure whether the hon. Gentleman suggests that the Government should take that power.
Even the hon. Gentleman's own Government in 1971 had to throw away their attempts at a complete outlawing of the closed shop and to recognise that there was a place for it in some industries. Our position in these matters is one of strict neutrality, leaving it to people in industry to handle these matters for themselves.

Mr. Ioan Evans: Will my hon. Friend agree that in the history of the growth of the trade union movement there have been many thousands of trade unionists who have lost their jobs for daring to join a trade union? Will he also agree that it should now be the task of the House and of people on all sides to encourage all working people to join their appropriate union?

Mr. Walker: My hon. Friend is quite right in saying that there has been a long record of victimisation and blacklisting of people for their trade union activities. I hope that the House will join my hon. Friend in encouraging members of trade unions.

Mr. Hayhoe: Will the Minister join with decent people in condemning the sacking of those who have served a lifetime in an industry and not been members of a trade union? Is it not intolerable that the closed shop should be used in this way to sack that sort of person?

Mr. Walker: I think that the hon. Gentleman and the House ought first to appreciate that what the Government have done is to restore the legal position to what it was in 1970, before the Conservative Government introduced their disastrous Industrial Relations Act, with all the evil consequences and damage which flowed from that.
There is now a tribunal to which recourse is available for those who may feel that they have been unjustly dismissed. There is specific exemption in the 1974 Act for those who have genuine religious objections to membership of a trade


union. If there have been unfair dismissals, the proper recourse of the people concerned is to the tribunal.

Mr. Gow: I beg to give notice that I shall seek leave to raise the matter on the Adjournment at the earliest possible moment.

Oral Answers to Questions — WESSEX

Mr Adley: asked the Prime Minister if he will pay an official visit to Wessex.

The Prime Minister (Mr. James Callaghan): I have at present no plans to do so.

Mr. Adley: Will the Prime Minister tell the people of Wessex and the House what he would say if he were Leader of the Opposition coming to Prime Minister's Question Time on the day when the Government announce unemployment figures in excess of 1,300,000?

The Prime Minister: I would say to the people of Wessex what I would say to the rest of the country, namely, that the figures are unacceptably high, that they are the consequence of economic policies which allowed our monetary system to get out of control, that it is important that we should overcome inflation, and that we should use all possible opportunities through training for our young people to get these figures down as low as possible. If I were Leader of the Opposition, I would go on to say that I therefore give full support to the efforts of the trade unions in their attempt to introduce an incomes policy.

Mr. Bryan Davies: Will my right hon. Friend agree that one of the last people to make regular official visits to Wessex was King Arthur, head of the workers' co-operative of Knights of the Round Table? Was it not his function in life to bring light to dark areas of Conservative England?

The Prime Minister: Yes, Sir, and I think that another frequent visitor was King Alfred. He burnt the cakes, and I am sure that the Leader of the Opposition would never do that.

Mr. Prior: What has happened since October 1974, when unemployment was said by the Government to be coming under control, to lead to the devastating

and intolerable figures that the Government have announced today?

The Prime Minister: I think that what has happened is that in September 1973 the increase in the money supply had reached the never before achieved level of 28·5 per cent. under the M3 system. That was inevitably bound to lead to inflation of an unprecedented character. It has done so, and we have now started as a country, I am glad to say, to correct the errors of the last Administration.

Mr. Prior: Will the Prime Minister answer my question, which referred to October 1974?

The Prime Minister: I am giving an answer to the right hon. Gentleman, but I cannot give him an understanding.

Mr. Ward: Has my right hon. Friend seen the Conservative publication Free Nation for 11th June, which puts forward immediate and enormous public expenditure cuts of over £16,000 million? Would my right hon. Friend like to say what effect such cuts would have on our unemployment situation?

The Prime Minister: The cutting of public expenditure now would, of course, lead to additional unemployment. I have made this clear time after time, and I have spoken of the dilemma that will face the country in 1977 and 1978, when it is expected that investment will increase very considerably, thanks to returning confidence. The latest forecast is that companies hope and expect to increase their private investment in new plant and machinery by 15 per cent. If that is so, it will have certain consequences for Government policy.

Mr. Norman Lamont: If the Prime Minister meets the people of Wessex, what does he think they will think of a Chancellor of the Exchequer who persuades the trade unions against the child benefit scheme on the ground that the Cabinet is against it, and then the very next day persuades the Cabinet against it on the ground that the TUC is against it? Is not this, even by the Chancellor of the Exchequer's standards, an extraordinarily low piece of double-dealing?

The Prime Minister: Personal attacks of this nature are becoming characteristic of the Opposition. The way in which


the discussions on this matter have been held and the approaches made involve no criticism of my right hon. Friend or anybody else. The Government have taken their decision after perfectly sensible and fair discussion.

Oral Answers to Questions — ECONOMIC POLICY (PRIME MINISTER'S SPEECH)

Mr. Ashley: asked the Prime Minister if he will place in the Library a copy of his public speech on economic policy to the General and Municipal Workers' Union in Bournemouth on Monday 7th June.

Mr. Wyn Roberts: asked the Prime Minister if he will place in the Library a copy of the public speech on economic policy to the General and Municipal Workers' Union in Bournemouth on 7th June 1976.

The Prime Minister: I did so the same day.

Mr. Ashley: Does my right hon. Friend recall that in his speech to my union's annual conference, a speech that won a standing ovation, he rejected demands for the decimation of the public expenditure programme, but also rejected demands for increased public expenditure without regard to the cost involved? Is he aware that he will be warmly supported in walking this economic tightrope, but that if the Government are prepared to economise on the child benefit scheme—one of the great weapons against family poverty—they will be making a serious mistake that they will long live to regret?

The Prime Minister: The Government have introduced a new benefit for children of £1 per week with an additional 50p premium for single-parent families. That is the beginning of the introduction of the scheme and we shall go on to fulfil it in due course. However, as the total scheme at the rates proposed would have cost more than £300 million next year, it would not have been possible to introduce it.

Mr. Roberts: Can the Prime Minister say what could happen over the next six months to make unnecessary an extension of the £3 billion standby credit

arrangement, further borrowing from the International Monetary Fund, increases in taxation, or cuts in public expenditure?

The Prime Minister: No, Sir.

Mr. Atkinson: Is not my right hon. Friend in danger of being misunderstood in the argument which he used at Bournemouth and in reply to his first Question today? He says that the Government cannot reflate the economy until the rate of inflation has been reduced. Does that not suggest that the Government are using unemployment as an economic regulator? Could he not put the record straight by advising local authorities and others involved in public expenditure that they must not cut back at the expense of jobs?

The Prime Minister: We have asked local authorities to keep in line with the figures they agreed before the beginning of the year. That is not unreasonable. I trust that they will do it.

Mrs. Thatcher: As the Bournemouth speech was largely on economic policy, will not the Prime Minister agree that confidentiality within the Government is vital for the conduct of economic policy? Since the right hon. Gentleman made his statement about an isolated leak last week, the Parliamentary Secretary to the Privy Council Office has issued a statement, on his ministerial responsibility, saying that there have been premeditated leaks over a wide range of Cabinet business in the past 18 months. Does that speech represent the view of the Government?

The Prime Minister: I read my hon. Friend's speech with very great interest. Probably the only mistake he made was to talk about the last 18 months, because I am afraid that this has been going on for rather a long time. I have a list here. I do not think I shall read it, but those who live in glass houses should not throw stones—otherwise they might find trouble.

Mrs. Thatcher: The Prime Minister is trying to throw off this matter very lightly. Is he not aware that many people read that speech not merely with interest but with the greatest possible alarm? Is he aware that if it represents the true course of events, there can be no confidentiality of Cabinet proceedings and no confidence in the country about the conduct of defence, security or economic matters?


Does he not think that he should completely repudiate that speech?

The Prime Minister: I am aware of the seriousness of this matter. As I said last week, we should be very careful about the way in which we conduct our affairs in relation to briefings. I am especially concerned about the actual reproduction of Cabinet minutes, but it is no good the right hon. Lady adopting this "holier than thou" attitude. Perhaps I should refer her to the investigations into leaks on defence matters on 14th January, 3rd May, 23rd May and 12th November 1971, 19th March and 19th April 1972 and into the leak about the purchase of American missiles on 24th July 1973, every one of which was concerned with leaks by the Ministry of Defence. Anybody can throw stones. The point is that the Government and Ministers should take defence, foreign affairs and other issues very seriously in order to ensure that these leaks do not take place. But I cannot have one side of the House hurling accusations at the other.

Mr. Heath: Does not the Prime Minister agree that what he has just said shows that the last Conservative Government took this matter seriously? Can he tell us when the minutes of a Cabinet meeting were last published in public just a short time after the meeting took place?

The Prime Minister: This has never happened to my knowledge.

Mr. Whitehead: As it was under the Administration of the right hon. Member for Sidcup (Mr. Heath) that, in the words of Mr. Harold Macmillan, the Think-Tank first started to leak, can my right hon. Friend say how many major leaks there were under the last Conservative Administration?

The Prime Minister: There were 37 leaks and 30 inquiries into them. As far as I can see, we are just about par for the course at present and it is about time the situation was improved.

Mr. MacGregor: Will the Prime Minister confirm what he appears to have told the TUC and Labour Party Liaison Committee yesterday—that further public expenditure cuts cannot be ruled out, bearing in mind his remark about two buckets dipping into the pool of

savings? Does he agree with the statement by the Governor of the Bank of England that if the borrowing requirement is to be reduced, there should be a presumption against further increases in taxation and therefore in favour of spending cuts as soon as possible?

The Prime Minister: I have made my position on this matter quite clear at every Question Time. I have nothing to add to it.

Mr. Whitelaw: The Prime Minister has referred to track records, but will he not address himself to the point raised by my right hon. Friend the Member for Sidcup (Mr. Heath) and confirm that this is the first time Cabinet minutes have been directly leaked? Is this not a very serious matter and does it not follow that the hon. Member for Rugby (Mr. Price), who is one of the right hon. Gentleman's own Ministers, has indicated a very serious difference between the current situation and what has happened under any previous Government?

The Prime Minister: The right hon. Gentleman should keep himself up to date. I set up an inquiry into this matter last Thursday because of the gravity with which I regarded it. I suggest that we should wait until the result of that inquiry is known. I hope that it will have better results than some of the inquiries which took place under the Administration of which the right hon. Gentleman was a member.
I surely made my position quite clear to anybody who was here on Thursday. It is utterly reprehensible that the minutes of Cabinet meetings, which are distributed to a limited number of people, should be reproduced accurately in public. People may not like the rules, but they should seek to change them and not break them because they do not like them.

Oral Answers to Questions — QUESTIONS TO MINISTERS

Mr. Marten: On a point of order, Mr. Speaker. There were 37 Questions down to the Prime Minister today, and we reached No. 2. Important as the last Question was, it developed into a debate which shut out the other questioners. May we get on with our Question Time?

Mr. Speaker: May I say that I am rather surprised by the source of the


point of order? The hon. Member for Banbury (Mr. Marten) is not lacking in jumping up during Prime Minister's Questions. If the House is feeling strongly on a matter, it is difficult for me to decide when the moment has come to cut off the questions. This afternoon it seemed to me that there was a rising interest in Question No. 2.

Oral Answers to Questions — AIRCRAFT AND SHIPBUILDING INDUSTRIES BILL (PROCEED INGS)

The Prime Minister (Mr. James Callaghan): With permission, Mr. Speaker, I will make a statement.
The House will recall that on 27th May we voted on the procedure motion on the Aircraft and Shipbuilding Industries Bill. The first vote was decided by Mr. Speaker's casting vote and on the second the Government had a majority of one. It was subsequently alleged that the Government's majority had been achieved by questionable means, and since then there has been a sense of grievance, resulting in the breakdown of communications through the usual channels.
It is not in the interests of the House that matters should remain in this state. The business of the House is being disrupted and the Members themselves are being put to considerable inconvenience and even, in some cases, distress.
The right hon. Lady the Leader of the Opposition and I met informally last week to consider how best to deal with this. We recognised that there was a sense of grievance about the vote on 27th May. We thought it right, therefore, to ask our Chief Whips privately to carry out together an informal inquiry on their own into what had happened and to let us have a common account for our private consideration. This they have done, and the right hon. Lady and I have considered it together.
The agreed result of their inquiry makes clear that there was undoubtedly misunderstanding about the pairing and voting arrangements on 27th May and that the normal courtesy of consultation about changes in pairing was not observed as it should have been.
In the light of this, I do not believe that matters should be left as they are and I propose, after consultation with the Leader of the House and the Chief

Whip, that it would be in the best interests of the House if the Government were to provide the opportunity for the issues on which the votes were taken on 27th May to be considered again and the matter put to the vote in an appropriate way. The Leader of the Opposition has already, with her colleagues, tabled a motion to refer the Shipbuilding and Aircraft Industries Bill to a Select Committee, and if the House were to debate that motion this would provide the opportunity for the House to vote again on the matter. Accordingly, the Leader of the House will be announcing in his Business Statement on Thursday that a debate will be arranged on the right hon. Lady's motion.
I hope that an arrangement of this kind will commend itself to the House, that the two Chief Whips will meet to discuss how to avoid a recurrence of the events of 27th May, and that we can resume the orderly arrangements of our affairs through the usual channels.

Mrs. Thatcher: I thank the Prime Minister for making this statement. I am grateful to him for acknowledging that there was a grievance, and that it was well-founded, by providing what I hope will be a full day to debate the motion about setting up a Select Committee to consider petitions.
Secondly, as the right hon. Gentleman has stressed that the normal courtesy of consultation about changes in pairing was not observed as it should have been, may I say that as a certain name has been mentioned I should like to make it quite clear that the inquiry found no personal blame attached to the hon. Member for Stalybridge and Hyde (Mr. Pendry)?
Thirdly, as the right hon. Gentleman has recognised that an assurance is needed so that there can be a basis of trust in future, I agree that our two Chief Whips should get together to see how best they can obtain mutual assurance about the conduct of pairing matters in future. When they have obtained that mutual assurance between them and their respective offices, I hope that the way will be open to resume business as usual.
Finally, I stress that on this side we believe that business, whether by Government or Opposition, must be conducted on the basis of the rules of the House, which are clearly understood, and the normal, understood customs and conventions about pairing.

The Prime Minister: I agree that the right hon. Lady's complaint was well-founded. Indeed, I indicated to her on the first occasion we met that I knew that there was a genuine sense of grievance. As regards the timing of the debate, I think that is a matter for discussion between the two Chief Whips. The question whether it is a full day's debate is something that they can discuss. If the Opposition want a full day, I hope that the Chief Whip will not resist—[HON. MEMBERS: "Tomorrow."] I believe that there is some business set down for tomorrow.
I thank the right hon. Lady for the generosity of what she said about my hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry). I welcome what she said. I did not wish to make any personal references. I fully accept that we should now try to put this matter behind us. The Government have made a proposal which I fully understand will in some ways be regarded cynically. Nevertheless, it is my desire that the present situation should not continue to affect relationships between both sides of the House because the House cannot continue unless the present situation changes.

Mr. Grimond: Is the Prime Minister aware that the last thing I want to do is to detract in any way from the sweetness and light that has suddenly broken out this afternoon? However, will he bear in mind when arranging the business of the House that there are eight parties in the House—not two or even three, but eight—and that they are concerned with the running of the House?
Further, I ask him to remember that the main issue in the debate which led to the trouble was not so much the Bill in question as whether the rules of the House should be altered, without consultation, to the detriment of those in the House and outside. It is that matter which many of us feel is extremely important. Will a discussion of that be in order in the forthcoming debate?

The Prime Minister: It is not for me to say what will be in order in the debate. That is a matter for you, Mr. Speaker. The motion put down by the right hon. Lady is very broad, and I imagine that hon. Members will be able to go very wide on it. It calls for reference to a Select Committee.

Mr. Arthur Bottomley: Is my right hon. Friend aware that all believers in parliamentary democracy will welcome his statement and its reception by the Leader of the Opposition, and feel that he and the right hon. Lady are to be commended on their wisdom and statesmanship? May I remind my right hon. Friend that on one occasion when the House was having difficulties a time ago, when we were both in Parliament, a Member of the then Opposition shared with us the view that this should not happen? It reminded us that in 1906 the feeling in the House was such that Government and Opposition Members did not even speak to each other. Let us hope that that never happens here. May parliamentary democracy be sustained.

The Prime Minister: I thank my right hon. Friend for what he has said. Like him, I have lived through many stormy days in this House. I think none of us will ever forget the period of Suez, for example. However, I do not think that relations between hon. Members on this occasion have been anything like what they were on some previous occasions that I can recall. Perhaps the wisdom and sanity of Back Benchers has enabled us to produce a result that, I hope, will be acceptable.

Several Hon. Members: rose—

Mr. Speaker: Order. I hope the House will take my advice and say that in the best interests of the House we should leave the matter there for the time being.

Mr. Maxwell-Hyslop: On a point of order, Mr. Speaker. There is one aspect which I think should properly be raised as a point of order as it concerns the Chair. In the disputed vote on the night of Thursday 27th May, Mr. Speaker, who does not have discretion in these matters—he is governed by precedent in the way in which he votes—would have been bound to vote with Opposition Members on that occasion. If the Question is put in such a way in the debate to which the Prime Minister has referred that Mr. Speaker is bound to vote the other way, because the motion is procedurally an amendment to a Government motion, that would not give the House the same opportunity as it had that night.
Therefore, I ask that the Prime Minister should declare that, if there is a tie, it would be the view of the Government


that Mr. Speaker ought properly to vote—[HON. MEMBERS: "No."]—yes—with the same effect as his vote would have had if it had been cast according to precedent that night, otherwise the objective of the Prime Minister and of my right hon. Friend of restoring the situation that prevailed that night will be frustrated.

Mr. Speaker: The House knows that Mr. Speaker is always guided by precedent and that, in casting his vote, he does not consider which side of the House is affected, although he notices it. Since both the right hon. Lady and the Prime Minister have made their statements, I hope that we may leave the matter there for this afternoon. I understand that the usual channels are to meet. They will no doubt take note of what the hon. Gentleman has brought to the attention of the House in his point of order.

Mr. Adley: On a point of order, Mr. Speaker—

Mr. Faulds: On a point of order, Mr. Speaker—

Mr. Speaker: Mr. Adley, on a point of order first.

Mr. Adley: Following the point of order raised by my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop), would it not also be reasonable to suggest that the numbers of hon. Members eligible to take part in that Division should be the same as the numbers who took part before? In other words, as the constituencies of Rotherham and Thurrock were vacant on that previous occasion, should there be new Members of Parliament for those constituencies on the future date they should not be allowed to participate in the vote.

Mr. Speaker: Order. I hope that hon. Members will not try to pursue the argument through points of order. If I tried to stop anyone elected to this House from voting, I think that I should be the first Speaker in history to do so.

Mr. Faulds: On another point of order, Mr. Speaker. With due deference, I think it is unfortunate that you have cut off the opportunity of the House welcoming the Leader of the Opposition's exculpation of my hon. Friend the Member for Stalybridge and Hyde (Mr.

Pendry) and welcoming the Prime Minister's typical forthrightness and decency on this issue.

Mr. Speaker: Order. I felt that I had the approval of the House.

EUROPEAN COMMUNITY (NEW ZEALAND BUTTER SUPPLIES)

3.43 p.m.

The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart): With permission, Mr. Speaker, I should like to make a statement about the agreement reached in the Council of Ministers (Agriculture) in Luxembourg yesterday about imports of butter from New Zealand. The Council agreed on arrangements which carry out fully and satisfactorily the understanding secured at the European Council in Dublin last year.
Under these arrangements, the quantities which may be imported from New Zealand in 1978, 1979 and 1980 are 125,000, 120,000 and 115,000 tonnes respectively. These are firm and fixed quantities.
Within these fixed quantities, there are arrangements under which some butter may be diverted, if necessary, from the fresh market into food manufacture. This will apply only to imports in excess of 25 per cent. of our butter market in the preceding year. It will not affect New Zealand's total entitlement or her financial return.
Finally, the Council made a statement confirming that Protocol 18 remains the basis for continuing imports of New Zealand butter after 1980. The Commission will make a report in 1978, and this will serve as a basis for further decisions on these continuing arrangements.
I kept in close touch with the New Zealand authorities during these negotiations. New Zealand fully agrees that the settlement reached takes account of their essential interests both up to 1980 and afterwards.

Mr. Pym: The House will be glad that this important matter has been resolved. Does the last sentence of the statement, which refers to the settlement taking account of New Zealand's essential interests, mean that New Zealand regards this as a fair and satisfactory arrangement?
I should like to ask the right hon. Gentleman three other questions. First, if the whole of this quantity comes to the United Kingdom and it exceeds 25 per cent. of consumption in the previous year, who will pay for the decrease in the price of butter diverted into manufacturing? The right hon. Gentleman said that it would not affect New Zealand's financial return. Somebody will have to pay the bill. Who will that person or body be?
Secondly, will the Minister be more explicit about what he believes will be the impact and effect on the United Kingdom butter market, which is now in a state of revival?
Lastly, does not this agreement mean that it is even more vital now than it was before to get on top of the ever-increasing surplus of dairy products in the Community? Will he assure the House that he will not again agree to a hare-brained scheme that demonstrably fails to achieve the required objectives?

Mr. Peart: I am surprised that the right hon. Gentleman should be contentious about this matter. The Community has always recognised a continuing commitment to find room for New Zealand's imports into its market. The Community is pledged to agree this autumn on measures designed to bring the milk products market into better balance and to rectify the surplus situation. I cannot go beyond that. I think that this is a very good deal for New Zealand. Indeed, the Deputy Prime Minister of New Zealand made a magnificent statement on this matter. He said that the agreement protects New Zealand's interests, and added:
I am particularly grateful for the understanding and support received from the British Government and the EEC Commission. Now that the outcome is known the dairy industry will be able to plan ahead with greater confidence.
On manufacturing, the Deputy Prime Minister of New Zealand said that in the lengthy negotiations New Zealand had been at paints to stress the need to preserve cif returns and the need to be able to market the diverted butter. This will not cost us what I think the right hon. Gentleman implied. Naturally New Zealand will have access to our markets in the way that it always has had. This is a very good deal for New Zealand.

Sir G. de Freitas: Does my right hon. Friend believe that this settlement bears out the belief of those of us who thought that New Zealand would get a perfectly fair deal from the Community as a result o the British Government's representations?

Mr. Peart: Yes, I accept that. Indeed, the Deputy Prime Minister of New Zealand publicly stated:
The package was the result of very tough negotiations and what had finally been agreed took account of New Zealand's essential interests.
He then went on to talk about access after 1980:
None the less, a statement read into the Council Minutes"—
[Interruption.] I do not know why hon. Members laugh; this is a major statement affecting New Zealand—
makes it clear that the Commission will submit a further report to the Council before 31st December 1978, and this, taken with the decision made by the Heads of Government at Dublin, assures the ongoing nature of the arrangement beyond 1980.
New Zealand has praised this deal, and I am very proud of it.

Mr. John Davies: Does the right hon. Gentleman recognise that the satisfactory settlement which he reached is fully in conformity with the terms negotiated at the time of accession—and that anything that has been said since then to imply that the terms of accession did not provide for just such an arrangement totally falsifies the reality of the situation?

Mr. Peart: I accept that the agreement was based on Protocol 18. The Government and I played a major part in achieving that. I am grateful for the right hon. Gentleman's support.

Mr. Jay: I understood the Minister to say that imports of New Zealand butter would occur on a declining scale from 1978 to 1980, from a figure which was already much below that of five years ago. Will the Minister assure us that the Government do not accept the presumption that the decline will continue after 1980?

Mr. Peart: My right hon. Friend is wrong, as he sometimes is, on this matter. The quantity that I negotiated was fully consistent with the Dublin declaration and is more than New Zealand has recently


sent. It means that the average entitlement for 1978 to 1980–120,000 tonnes—is higher than the average sendings in 1974 and 1975, which was less than 119,000 tonnes. Indeed the degressivity is less than that originally proposed by the Commission. I hope that my right hon. Friend will not nit-pick and that he will welcome this deal.

Mr. Geraint Howells: I am sure that the New Zealand Government were pleased to accept the present arrangements. But I wonder what were the views of the British producers. If home milk production continues to rise at the present rate for the next five years, does the Minister think that we shall take up the quota of New Zealand butter that was agreed yesterday? If so, what effect will that have on our dairy industries? We are all aware that the New Zealand butter imported into Britain has been subsidised during the past few years from EEC funds. Will that policy be continued until 1980?

Mr. Peart: The hon. Gentleman represents an important dairying area in Cardiganshire. He will know that we had a moral obligation to help New Zealand. That was stated by both Governments. After all, New Zealand came to our aid voluntarily in a crisis. New Zealanders regard themselves as British in the best sense. That is not sentiment. I believe that we fulfilled that moral obligation under the terms of the Dublin Summit agreement. I do not worry. I think that we can accommodate this market and at the same time have a flourishing dairy industry in our own country.

Mr. Mark Hughes: I congratulate the Minister on this agreement. However, does it not make a reform of the Community dairy industry more essential than ever? The accession of this quantity of butter from New Zealand puts enormous pressure on the Dutch, the Danes and the other producers in the Community and must force the Community to mend its ways of dealing with dairy products.

Mr. Peart: I am not sure what my hon. Friend is trying to argue. The dairy industries of the countries he mentioned are efficient in many ways. The Com-

munity agrees with us that there should be a link with New Zealand—we have achieved that—despite the fact that it has problems with its own dairy industry. Therefore it was not easy for the Commission to make that decision. The Commission felt that it must honour the Dublin agreement. I am proud to say that it did so. Commissioner Lardinois played an important part in that.

Mr. Marten: The Minister said that some imports of butter may be diverted into food manufacture. Does that mean that if the British people want to eat more than 25 per cent. of New Zealand fresh butter they will not be allowed to do so? The Minister did not answer the question asked by my right hon. Friend the Member for Cambridgeshire (Mr. Pym) about cost. The Minister said that ongoing arrangements would be assured. To which assurances did he refer?

Mr. Peart: I referred to the assurances contained in my statement, which have been approved by the New Zealand Government.
There will be no diversion into manufacture unless imports of New Zealand butter under the special arrangements are more than 25 per cent. of the United Kingdom market for butter for direct consumption in the preceeding year. If imports of New Zealand butter amount to more than 25 per cent. of the United Kingdom market for direct consumption in the preceeding year, butter may if necessary be diverted into food manufacture—for example, cakes and biscuits. This is a sensible arrangement which was approved by New Zealand.

Several Hon. Members: rose—

Mr. Speaker: If the House will cooperate with me and ask brief questions, I hope to call everyone who has stood so far. However, I hope that hon. Members will ask single questions, as there is a great deal of other business.

Mr. Spearing: Does my right hon. Friend remember saying that the Dublin agreement on special arrangements would not deprive New Zealand of the outlets which were essential to it after 1977? Have the New Zealand authorities confirmed that the quotas which my right hon. Friend announced will not deprive them of those outlets? How do we know


that the amounts sent out will be up to those figures?

Mr. Peart: I cannot say exactly. The Deputy Prime Minister of New Zealand has confirmed that we agreed.

Mr. Moate: Will the Minister be more helpful about the post-1980 situation? Does he expect the principle of degressivity to continue to apply thereafter? Is there a longer-term assurance?

Mr. Peart: I mentioned the proposal for a review in 1978 to determine access after 1980. The New Zealand Deputy Prime Minister said:
It is clear that the arrangements will continue after 1980. The Council of Ministers were not prepared to admit the inclusion in the Council regulation of an article making explicit provision for a review in 1978.… None the less a statement read into the Council minutes makes it clear that the Commission will submit a further report to the Council before 31st December 1978, and this, taken with the decision made by Heads of Government at Dublin, assures the ongoing nature of the arrangement beyond 1980.
We have confirmed that. It was approved by New Zealand. [Interruption.] Hon. Members may mutter. I cannot be more New Zealand than New Zealand. I have defended New Zealand's interests. That was agreed.

Mr. Hooley: Will my right hon. Friend say what will be the effect of this agreement on the consumer? Will he confirm that the intervention stocks of butter by the end of this year will be 400,000 tonnes?

Mr. Peart: I cannot confirm that. Nor can I give precise figures.

Mr. Raphael Tuck: Do the Government assume that New Zealand will produce 500,000 tonnes of butter less every year until finally it produces nothing at all?

Mr. Peart: Mr hon. Friend is being facetious. I have the impression that some hon. Members wish that I had not succeeded.

Mr. Corbett: I accept that my right hon. Friend has done his best within the straightjacket within which he must live. Will he not take on board the point made by my hon. Friend the Member for Durham (Mr. Hughes) that the agreement underlines the urgent necessity for the

Community to put its own dairy industry in order?

Mr. Peart: I do not wear a straitjacket. I was freely able to negotiate with New Zealand and with my colleagues in the Community. Hon Members are showing that they do not wish to have a successful deal with New Zealand. We achieved a successful deal, which was approved by the Government of New Zealand.

Mr. Gould: Does the Minister accept that it is difficult to base any argument on the amounts of butter supplied by New Zealand to this market over the past year or two, as the New Zealanders have been subject to considerable pressures by the Commission—in terms of prices and the future arrangements on which they depend—not to supply the quotas to which they are entitled?

Mr. Peart: I agree with my hon. Friend the Member for Southampton, Test (Mr. Gould). He is a New Zealander and, in view of his background, he knows the difficulties. The tonnage agreement which I obtained is a good one. The continuing access provision was approved by New Zealand and the New Zealanders responsible for this matter. I am proud of the agreement. It shows that we have been able to accomplish what we set out to achieve.

Mr. Ioan Evans: Although the Minister has maintained the interests of New Zealand, has he considered the essential interests of the housewives of this country? Surely we should seek to scrap the EEC common agricultural agreement, which works against the interests of the housewife. In view of the build-up of the surpluses and the price rises, something must be done to change the scheme.

Mr. Peart: I am rather surprised at that question. My hon. Friend the Member for Aberdare (Mr. Evans) must have supported me on previous occasions when I was critical of negotiations. Certainly the present arrangement is not incompatible with the needs of our consumers. If my hon. Friend is saying that I should not have obtained this access, I understand his argument, but I still believe that it was right to obtain access for New Zealand butter to this market. We gave a pledge on that matter


as a party, and I am sure that my hon. Friend was party to that pledge. I gave a pledge to the Dublin Summit, and I shall not go back on it.

Mr. W. E. Garrett: I am sure that it has not escaped your attention, Mr. Speaker, that when we are discussing agricultural matters, I am always among the last to be called.

Mr. Speaker: I always keep the best until last.

Mr. Garrett: I know my right hon. Friend's loyalty to and love of New Zealand, and I accept his assurance. I know that he seeks to obtain the best possible deal he can for New Zealand. Therefore, I hope that the agreement is more successful than some of the rotten agreements we have made in the last few months. Is my right hon. Friend aware that the farming correspondent of the Observer, Mr. Murray, correctly anticipated the situation by stating the precise terms of the agreement that was read out this afternoon? Was that intelligent anticipation, or was it a leak?

Mr. Peart: My hon. Friend, who has read the Dublin agreement, will know the aims of the British Government. Therefore, there is nothing new in the situation, and indeed the matter was endorsed by the House of Commons. I know Mr. Murray as a distinguished journalist and a sensible man. There are no leaks involved in this matter. I have just returned from Luxembourg, where we had long discussions late into the night. I was glad to achieve what I did achieve. I was grateful for my hon. Friend's earlier remarks.

Mr. Pym: The figures of tonnages were mentioned in the course of the debates on the European Community on Thursday of last week. I think that that is the answer to the hon. Member for Wallsend (Mr. Garrett).

Mr. Peart: I am grateful for that reinforcement of what I said. That is what we want to endorse in relation to the Dublin Summit.

INDUSTRIAL COMMON OWNERSHIP BILL

Mr. Peyton: On a point of order, Mr. Speaker. May I ask for your help on a

Private Member's Bill entitled the Industrial Common Ownership Bill? The Bill was introduced into the House in December last year and was given an unopposed Second Reading as a Private Member's Bill in March. It is about to go into Committee tomorrow.
At the last moment—that is to say, last night—the Government proceeded in a slightly strange fashion. They tabled amendments to remove seven out of eight of the Bill's clauses and to amend the Long Title of the Bill. I am sure that it will be agreed that that is a slightly odd approach, even in these rather bizarre days. It means that if this kind of procedure is to be continued, the necessity for a Second Reading debate which normally takes place on Government measures will be bypassed. Furthermore, it will mean that Private Members' Bills, which are still a residual privilege of private Members, will be badly abused.
I hope, Mr. Speaker, that you will be able to give the House some guidance in order to safeguard the rights of the House, which seem in this case to be in danger of being badly abused.

The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot): Further to that point of order, Mr. Speaker. In view of the remarks made by the right hon. Member for Yeovil (Mr. Peyton), I wish to make some further inquiries about this matter, and I hope to report to the House upon it. I do not know the details of the matter, but I shall examine the situation before we proceed.

Mr. Peyton: I appreciate the right hon. Gentleman's reaction. Am I to understand that the Bill will not be proceeded with until the right hon. Gentleman has had a chance to examine the matter?

Mr. Foot: I imagine that before we deal with the matter, I shall be required to make a statement. Since I have no knowledge of the matters under consideration, I shall immediately examine the situation, communicate with the right hon. Gentleman and make a statement to the House.

Mr. Newens: Has the right hon. Member for Yeovil (Mr. Peyton) informed my hon. Friend the Member for Consett (Mr. Watkins) of the fact that he sought to raise this matter today? I understand that


the Bill is scheduled to go into Committee tomorrow morning. If that is the case, surely the right hon. Member should have informed my hon. Friend that he intended to raise this point on the Bill. Would that not have been the courteous thing to do?

Mr. Peyton: Further to that point of order, Mr. Speaker. I do not seek to override the rights of the hon. Member for Consett (Mr. Watkins). Indeed, I am seeking to defend him against the intrusions of the Government.

Mr. Foot: Further to that point of order, Mr. Speaker. I should like to get in touch with my hon. Friend the Member for Consett (Mr. Watkins) so that I may understand the situation. I did not make any statement about holding up the Bill, but in view of what has been said I should like to go into the matter and to communicate with the right hon. Member for Yeovil or with the House. I shall examine the matter and get in touch with my hon. Friend the Member for Consett.

Mr. Peyton: Further to that point of order, Mr. Speaker. I hope that the right hon. Gentleman will make the position clear before any further proceedings are pursued in relation to the Bill. I hope that he will make the matter clear to me and not just to the Committee concerned.

Mr. Foot: I fully understand the right hon. Gentleman's point. I am seeking to safeguard the position. I must consult my hon. Friend to see what is his attitude. If it is satisfactory to my hon. Friend that these amendments should be made, obviously that is a matter to be taken into account. But I cannot judge the matter until I have had a chance to discuss the situation.

Mr. Peyton: I am sorry to pursue the matter, but I must tell the right hon. Gentleman that he is being a little less

than forthcoming on the Bill in question. The Opposition gave the Bill a Second Reading as a Private Member's Bill, and indeed as a non-controversial affair. The Opposition now find the Government coming in on all four feet, and it appears that their attitude has undergone a severe change.

Mr. Foot: I do not withdraw anything I have said. I shall look at the matter urgently. I must take account of my hon. Friend's views and I must weigh that matter. I am sure that the right hon. Gentleman will accept that I have approached the matter in a proper way.

Mr. Speaker: If I may intervene in a point of order, may I say that it would depend on the Chairman of Committees as to which amendments are selected. He may turn down all the Government amendments—in which case he would, of course, make history. It is my concern to protect the rights of this House. I have taken note of the point of order raised by the right hon. Member for Yeovil (Mr. Peyton) and I think we may leave the matter there. We must move on because we have still not dealt with the Ten Minutes Rule Bill.

Mr. Bowden: There is an important point of principle at stake, Mr. Speaker. If this House gives an unopposed Second Reading to a Bill, it is totally wrong and contrary to precedent that it should be altered by any amendment proposed by the Government at any stage.

Mr. Speaker: That is the same point as that to which I have just referred. I am conscious that I am guardian of the rights of the House, but we shall look carefully at the matter raised by the right hon. Member for Yeovil when the Bill comes back to the House. The Bill is now about to go into Committee and will be the responsibility of the Chairman concerned.

PROFESSIONS SUPPLEMENTARY TO MEDICINE ACT 1960 (AMENDMENT)

4.9 p.m.

Mr. John Corrie: I beg to move,
That leave be given to bring in a Bill to amend the Professions Supplementary to Medicine Act 1960 to include chiropody.
I want to ensure that in future the public will know that everybody who practises chiropody has a qualification recognised by statute. This is not the position today.
It may seem strange that a "Foot" Bill should emanate from the Conservative Benches, particularly in these difficult days, but this Bill would be an important step forward in chiropody.
The Bill has crossed the floor of the House because the hon. Member for Ealing, Southall (Mr. Bidwell) first raised the issue in the Chamber on 21st October 1969. It has all-party support today and I hope that it will not be opposed. It is also opportune that Age Concern—that body which does so much for our elders—has brought out a report this week entitled "Step on It". It is a report on the chiropody services which strongly supports the provisions in my Bill.
Under the heading "Discussion points", Age Concern states that chiropody should become a closed profession so that only those with State qualifications can set up as practising chiropodists. That would facilitate the use of less highly skilled but competent aides to assist in the National Health Service chiropody service who would provide the guarantees that members of the profession are anxious to secure for the protection of their own status and, more important, the safety of their patients.
Chiropody is important to people of all ages, not just to the elderly. At present chiropodists are registered under the Professions Supplementary to Medicine Act along with physiotherapists, radiographers and members of other supplementary professions. Chiropodists differ from other professions that are registered in two important ways. First, chiropodists' patients come directly to them and are not normally referred by the medical profession. Secondly, a large percentage of chiropodists are in private practice.
To be employed within the National Health Service chiropodists must be State registered but there is no restriction about private practice and, therefore, no real standard or qualification. Anyone can buy a pair of scissors, a nail file and, I hope, a bottle of disinfectant and, with a short correspondence course at best, put up a plate and become a chiropodist.
My Bill would make it compulsory for those in private practice to be registered or enrolled by the Chiropodist Board. Why should there be dual standards for the public and private sector? Why should those who are entitled to treatment within the National Health Service receive treatment by the fully trained and qualified while those who are not entitled to treatment within the National Health Service have to resort to someone without any form of training at all? Only a minority of the population receives National Health Service treatment in chiropody.
Because the Secretary of State accepts responsibility only for priority groups of patients—the elderly, the handicapped and pregnant women—almost all the working population have to seek private treatment. They have no choice. Should they not be protected from less qualified treatment? Should they not be given a guarantee that the chiropodist that they attend has a recognised professional qualification? A limited service is provided for school children by the National Health Service and I am pleased to say that most of that work is done in Scotland.
In order to become State registered, a chiropodist has to take a three-year course of training which includes life science, relevant medical subjects and detailed anatomy of the lower limbs. The course also ensures thorough clinical training and practice. Examinations are held every year. At the end of the course examinations are conducted by independent examiners in each subject.
It is important to remember that chiropodists do not only cut nails and treat corns but are also responsible for a comprehensive foot care service for all ages from the young to the old. Since their patients are not referred to them by medically qualified men, the chiropodist is often the first person to see diseases with symptoms occurring in the feet which require medical investigation. He has to decide whether it falls within his


province to treat that patient or to refer his patient elsewhere. That is one of the most important parts of his work. How can an unqualified practitioner in private practice hope to be able to send on a patient with such a problem if he cannot recognise the problem in the first place? How many people today suffer health problems because their unqualified chiropodist does not recognise that there is a complication somewhere else in the body?
My Bill would enrol any practitioner who has practised chiropody as his principal means of livelihood for five years out of the preceding seven years. That could probably be reduced in Committee. No more administration would be necessary, since the enrolment of practitioners would be by the existing Council for the Professions Supplementary to Medicine. Such enrolled chiropodists might then become eligible for employment in the National Health Service and help to overcome the present shortage of chiropodal manpower in the service. It would make little immediate difference to the profession but it would result in a better trained profession in the future because it would end the situation in which anyone can practice. It would mean that a chiropodist was the same wherever he worked, inside or outside the National Health Service. They would all be recognised as qualified professional people.
Care of the feet as part of medical practice is as old as medicine itself. Chiropody as a separate art began during the eighteenth and nineteenth centuries and, with the passing of the Professions Supplementary to Medicine Act in 1960, reached full professional status.
A large proportion of the population suffer from some kind of foot trouble—and that is not mean to be a pun. Those people are not as efficient as they should

be either at work or at play. Most of the conditions that cause their disability can be treated by chiropodists. They cannot all be cured but they can be improved and made symptom free. Money spent on improving the facilities and organisation of the chiropodal service would produce handsome returns in terms of the well being and efficiency of the population. Many feet are ruined by badly fitting, poorly made shoes from abroad. Fashion is the chiropodists' worst enemy.
I accept that there is little chance of the Bill reaching the statute book this Session but it is a serious matter which would have far-reaching consequences for both people in the profession and the general public. I give notice that I shall seek to reintroduce it at an early stage in the next Parliament—irrespective of which party is in power. I would like to see only those on a register or roll established and maintained by the Chiropodist Board using the title "chiropodist" or practising chiropody. I hope that the House will support me.

Question put and agreed to.

Bill ordered to be brought in by Mr. John Corrie, Mrs. Lynda Chalker, Mr. Andrew Bowden, Mr. Robert Cooke, Mr. Roger Moate, Mr. Ernest G. Perry, Mr. George Thompson, Mr. Peter Emery, Mr. Malcolm Rifkind and Mr. David Penhaligon.

PROFESSIONS SUPPLEMENTARY TO MEDICINE ACT 1960 (AMENDMENT)

Mr. John Corrie accordingly presented a Bill to amend the Professions Supplementary to Medicine Act 1960 to include chiropody: and the same was read the First time; and ordered to be read a Second time upon Friday 16th July and to be printed. [Bill 172.]

DEVELOPMENT LAND TAX [MONEY]

Queen's Recommendation having been signified—

4.19 p.m.

The Minister of State, Treasury (Mr. Denzil Davies): I beg to move,
That, for the purposes of any Act of the present Session to impose a new tax on the realisation of the development value of land, it is expedient to authorise the issue out of the Consolidated Fund of any sums required to enable the Commissioners of Inland Revenue in certain cases to make to a body by whom an interest in land is acquired a payment in respect of the tax paid on an earlier disposal affecting that land.
The resolution is needed because of the Government's proposal to include in the Development Land Tax Bill two new clauses which are numbered New Clause 2 and New Clause 3 on the Order Paper, which will in certain circumstances result in a body which is to acquire an interest in land net of development land tax obtaining a benefit which goes beyond receiving the development land tax paid by the vendor in respect of a particular acquisition.
New Clause 2 deals with the case in which an authority's intention of acquiring from the owner an interest in land for development is frustrated by his subsequently selling the land to a third party. That sale could very well cream off any development value, and if the authority later acquired the land from the new owner it would be likely to have to bear the full market cost, because little if any development land tax would be payable. As compensation, the tax paid on the first sale is to be paid over to the local authority.
A similar situation is dealt with in New Clause 3, giving an authority which acquires land developed in contravention of planning permission the benefit of any development land tax paid to the Revenue on the start of the development project.
The implementation of each of the new clauses could involve the Inland Revenue in making payments to the acquiring authority not out of current tax receipts but out of the Consolidated Fund.
The two new clauses do not affect any rights or any sales. They merely mean

the paying over to the local authority of a certain sum which the private individual has paid in tax to the DLT office in the two very limited circumstances which I have described. After a notice has been received by an owner of an intention by the local authority to buy his land, if he then sells the land to another private owner the DLT will be paid in the first instance to the Inland Revenue. If the resolution and the new clauses are accepted, the Inland Revenue will be given the power to pay over that money to the local authority.
We are not concerned with extensions of powers in relation to the payment of money to local authorities. The resolution is merely one which will have to be implemented if the House accepts New Clauses 2 and 3.

4.22 p.m.

Mr. Graham Page: The Money Resolution appears on the Order Paper because the Government failed to think out fully the peculiar procedure which now appears in Clause 39 and Schedule 7. We saw in Committee how the Government had failed to think the matter out when drafting the Bill, for a completely new Schedule 7 was presented to us. Then, at the very last moment before Report—I think only on Friday—we saw on the Notice Paper two new clauses supplementing the procedure for payment net of tax, the procedure whereby local authorities can estimate the tax and pocket it for themselves out of the money they pay when acquiring property.
We objected to this procedure as a whole. There are amendments today saying that the first thing to do in such a procedure is to have the tax assessed by the Inland Revenue and not estimated by the local authority. We object to an extension of the procedure.
We shall have an opportunity to debate New Clauses 2 and 3 on their merits. At this stage I merely want to protest at the extension of the principle to the situation in which the local authority acquiring property may have been a little late in doing so, with the result that there may have been a previous process which means that it is unable to deduct all the tax which it might otherwise have been able to deduct. Exempt bodies are not only local authorities. There are the other bodies mentioned in Clause 11. I presume that the resolution gives power


to the Board of Inland Revenue to pay over the tax on those occasions to such bodies as the Commission for the New Towns, the Highlands and Islands Development Board, the Lee Valley Regional Park Authority, the Letchworth Garden City Corporation, the North-Eastern Housing Association, the Scottish Development Agency, the Scottish Special Housing Association and the Welsh Development Agency.
It is extraordinary that, instead of accounting to the Exchequer for the tax which it collects, the board will be directed by means of this resolution and the new clauses to pay the tax over to the acquiring authority, whether that is a local authority or one of the bodies in the list in Clause 11. The procedure will be of the utmost inconvenience to those buying and selling property. As it applies to Clause 2, it means that a sword of Damocles will hang over the heads of owners of properties for five years.
I object to the principle that the total tax collected by the board will not go into the Exchequer but will be paid direct to those public authorities, the so-called exempt bodies. Nowhere in the Bill is there a right for those exempt bodies to have the whole benefit of the tax paid. Nowhere in the Bill is the whole benefit of the tax given to local authorities or any other authority providing community services. It is a tax which should go to the Exchequer and be dealt with the normal way, just like any other tax. We object to the extension of the peculiar procedure of purchasing net of tax—that is, an exempt body taking the tax from the purchase money that it pays.

4.27 p.m.

Mr. Nicholas Ridley: I have not given the Bill the study which many of my hon. Friends have given it. I am sure that the Minister of State will find occasion to remind me of that. The Bill is so important, however, that it is right for me to seek to acquire a little knowledge of it and make such criticisms as appear to me to be relevant.

Mr. Nick Budgen: I know that my hon. Friend has tried for a few days to understand some of the complexities of the Bill. Not many of our fellow citizens can apply

my hon. Friend's expertise and intelligence in considering detailed tax legislation. It must be with a sense of profound sadness that we contemplate the fact that so many people who have to try to understand the Bill will probably end up making mistakes and perhaps being ruined by their failure to understand this abortion of legislation.

Mr. Ridley: My hon. Friend is absolutely right. It would be better if we had not embarked upon such legislation. It is interesting to reflect on why we ever get into such a position. It would have been much more valuable if the Cabinet minutes dealing with the decision to go ahead with the Bill had been leaked. At least we should have had a glimmer of understanding of why we must be considering it at all.
I turn to the Money Resolution. It is odd that the Minister did not tell us what sums were likely to have to be repaid. I do not even know the likely yield of the tax. We must now debate that by reference to the repayments that might be made under the resolution, which makes the tax less valuable as a revenue earner. Therefore, I as least, am in the position of considering how much we can afford to disburse out of a tax whose yield I do not know.
That is an unsatisfactory position in which to be when we are considering a Money Resolution. After all, the point of a Money Resolution is to enable the House to control the expenditure of the Government. It is now becoming common for which this Government not to include in Money Resolutions the amount of money that is involved. That is a pity. I can understand that probably the amount will not be very much, because what the Minister has outlined to us is really an anti-forestalling procedure. It is designed to prevent people escaping from the mere serving of a local authority notice upon them.
I find pretty obnoxious the suggestion contained in the Bill that by serving a notice on a would-be, or perhaps non-would-be, seller of land a local authority can, so to speak, sterilise all further transactions in that land and acquire it for the value less the tax, keeping the tax, as it were, for itself. This raises a whole series of detailed questions to which I should like the Minister to reply. For instance, if a certain value attaches to


the land, both base value and market value, at the time the notice is served, obviously it is from those two values that the amount of tax is to be calculated.
Suppose, however, that through the transaction of selling the land to a third person the base value or the market value is found to be different, upon which set of figures is repayment to be made by the Treasury? Does the Minister follow me? I should like to know whether repayment will be made on the basis of the figures worked out by the local authority when serving the notice or on the basis of the actual figures when the third party transaction is made. If those two figures are different, is it not rather unfair that, the original owner having paid a given amount of tax, on the eventual transfer to the local authority the tax may be found to be something different? The amount may be very much less, and perhaps the original owner paid a lot more than he should have paid. What provision is there in the legislation for dealing with that situation? Clearly, that is a question which should be answered.
Again, suppose that a certain amount of time elapses and it happens that market values change, as the base values could change too, after a certain period. Is the amount of tax already paid by the Treasury to the local authority to take account of the changed values after a certain passage of time, or is it to be strictly confined to the original value when the tax was first levied?
If the two amounts of tax in the computation turn out to be different, is it the intention of the Government that the higher or lower value should be taken, or is the original owner of the land to be recompensed if he is found to have paid too much tax? These are all likely probabilities to occur. We know the speed at which the bureaucratic machine moves, and the time that will be taken in all these calculations and transactions is endless. Therefore, there seems to me to be a great deal of doubt about it all.
All this arises out of the extraordinary way in which the relevant part of the Bill is drafted. Surely, if it is desired to give back to local authorities the tax on sales to them, it would be much easier if the Treasury in all instances collected the tax and then paid it back in such circum-

stances as seemed appropriate to the Government. I have grave objection to the whole idea that local authorities should not have to pay what other citizens pay. The whole basis stinks of prejudice. I would mention the word "hybridisation", but I am sure that it would be wrong to mention that delicate subject to Labour Members because they do not like that word.

Mr. Tim Sainsbury: On that thought, I wonder whether my hon. Friend has considered the implications of Clause 11 and the authorities to which my right hon. Friend the Member for Crosby (Mr. Page) has referred. The Lee Valley Regional Park Authority is involved in this and it may be that other park authorities are not. It might indeed be appropriate to refer to hybridisation if other park authorities are to be involved.

Mr. Deputy Speaker (Mr. Oscar Murton): Before the hon. Gentleman continues his speech, I must draw the attention of the House to the fact that we must keep within the confines of the Money Resolution.

Mr. Ridley: I thought I had done so, Mr. Deputy Speaker, with considerable care hitherto. I do not know whether your rebuke was directed towards my hon. Friend the Member for Hove (Mr. Sainsbury) or myself. The Lee Valley Regional Park Authority is just such a body as might receive sums under the Money Resolution repayment, and I should have thought it would be difficult to discuss whether sums should be paid to these bodies without being able to mention them and their suitability for having any such sums paid to them. In my opinion, the Lee Valley Regional Park Authority is a most unsuitable body to have these sums repaid to it. I can think of much more worthy bodies than that authority which should be exempt.
The hybridity point could well have been raised, as it can be on New Clause 1, as to why industry should be treated differently from commerce, but I say that in parenthesis to avoid incurring a further rebuke from you, Mr. Deputy Speaker. I ask the Minister of State, therefore, to justify the Money Resolution, because it is very far from clear what will be the rights of local authorities in the less straightforward cases


with which this legislation will abound. There are bound to be many disputed, contentious and difficult cases.
The question of valuation is hard enough, particularly when they are deemed values, as the base value most certainly is. There will be many cases where the tax paid by the original seller is different from the tax as computed at the time the local authority eventually gets the land. We want a considerable dissertation from the Government as to how those cases are to be dealt with. I have referred to only two of them, but clearly we cannot contemplate going ahead with this complicated procedure unless we understand exactly how it is to work, if it is to work at all.

4.40 p.m.

Mr. Michael Latham: In the discussion of the Community Land Bill on the Floor of the House—and I am very glad to see the right hon. Gentleman the Minister for Planning and Local Government present—I said that the danger with Report stages and discussion of Lords amendments such as we had all night on the Community Land Bill was that those who were involved in the Committee proceedings reached a stage of talking to themselves and forgetting the wider issues having lived so closely with the Bill. It was for that reason that my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) opened his remarks with his usual percipience by bringing us back to the essential point of the amount of revenue to be made available to local authorities under the procedure already in the Bill, which is now being widened by this Money Resolution to take in the provisions of New Clauses 2 and 3.
I understand from those discussions that we sometimes have privately that I am likely to be able to speak on New Clause 3 and I do not want to anticipate that, but there are a few questions which need to be answered. The first, which seems to be absolutely basic, is what kind of revenue we are discussing. That is essential to any intelligent understanding of the subsequent clauses.
New Clause 3 is concerned basically with a way of getting round the enforcement procedure under the Town and Country Planning Act as it stands. It would be helpful if the Minister of State

would say how much revenue the Treasury expects to be in a position to disburse to local authorities from the provisions of New Clauses 2 and 3.
If he is about to say that he cannot do that, perhaps I can give him a slight hint. Can he say what is the current number of enforcement notices which have been served and how many of them have been approved? They are exactly the cases in which New Clause 3 will be involved, where illegal development has taken place and the local authority has sought to stop it. New Clause 3 says that not only shall the illegal development not take place, but that the local authority will claw back any added betterment which may have accrued.
Presumably this will help to swell the coffers of local authorities for the purposes of further land acquisition. As those hon. Members who recall the Community Land Bill will be aware, under Section 44(2) the Secretary of State, with the approval of the Treasury, sticks his hand into any surpluses local authorities may have accrued. If a local authority has made some money on land acquisition and subsequent disposal, or by buying land net of development land tax, that money goes into a big pool which is laughingly called the Community Land Surplus Account. If there is any surplus at the end, under the provisions which the Secretary of State has outlined in various circulars 30 per cent. will be left with the authority concerned and 70 per cent. will go to the Government, who will keep 40 per cent. and redistribute the other 30 per cent. to those local authorities which have been incapable of making any profits or which have wasted them. So Robin Hood will redistribute the money appropriately. The 30 per cent. is available, therefore, for further land acquisition by local authorities.
When we discuss New Clause 15 I for one will seek to point out that in Leicestershire this year for land acquisition for the whole county there is likely to be £450,000 allocated under the community land scheme, of which the Hinckley and Bosworth Borough Council wants £1 million. The revenues likely to be available are so trivial and the amount of money available, therefore, to bring land on to the market so negligible that difficulties for builders in future years in having an adequate flow of land


to finance the building programme will be insuperable.
As I say, when we come to New Clause 15 we shall be able to deal with that matter further, and that will be a particularly appropriate time for the Minister for Planning and Local Government to be present, because one of his arguments when we considered the Community Land Bill was that in the first two or three years builders would have enough land and that, at the end of that period, local authorities would be dishing out land to them in accordance with the acquisitions which had already been made. In view of the public resources which will be available—and they are likely to be negligible—the Government's hope that there should be a steady flow of land is likely to be completely nullified by events.
When the Financial Secretary put this Money Resolution on the Order Paper, presumably he had in mind a figure that would swell the coffers, go into the 30 per cent., and get Leicestershire's £450,000 this year up to, say £451,000 with which it could buy another chicken run to help more building in the county. We need to know that figure.
I emphasise that it is wrong for the House to consider and, if necessary, approve Money Resolutions without specific figures being given of forward projections. That is what the purpose of this House is all about. I hope that the Minister of State will be able to give figures of the expected yield and the information for which I asked him about the enforcement notices.

4.45 p.m.

Mr. Tim Sainsbury: At the outset of our discussions on this Bill I have to declare an interest in the subject matter since I am a director and a substantial shareholder of companies whose land might be affected by various aspects of the Bill, and, as one who is involved with a significant retailing organisation, I ought perhaps—

Mr. Michael Latham: I am afraid that I forgot to declare my own interest as a director of a house-building company.

Mr. Sainsbury: I am glad that I had the inadvertent opportunity to remind my hon. Friend the Member for Melton (Mr. Latham) about that. I had not quite finished my declaration of my own inter-

ests, however. I was about to add that I also have an interest as a farmer whose land, I hope, will never be affected by any of the Bill's provisions.
When he moved the Money Resolution, the Minister said that we were concerned with a resolution relating to two new clauses which arrived before us at a late stage in the lengthy process of our consideration of the Bill. My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) talked about "embarking" on our discussion. We appear, rather, to have been pulled up in order to give the Minister an opportunity to jump on board at the last minute with the Money Resolution and the two new clauses.

Mr. Ridley: Perhaps it is more akin to a journey on the Trans-Siberian Railway and that I have just joined at Omsk.

Mr. Sainsbury: I hope that my hon. Friend will not leave us at Novosibirsk.
Mr right hon. Friend the Member for Crosby (Mr. Page) said that New Cause 2 had been put on the Notice Paper on Friday. My recollection is that it was a "starred" new clause which was put on the Notice Paper yesterday. Therefore, amendments to it are now almost inevitably "starred" amendments and have not so far found favour in the eyes of your selection, Mr. Deputy Speaker. Incidentally, amendment (c) has been incorrectly printed. It should read
leave out 'five' and insert 'one'.
In any event, in view of the late arrival of the new clause to which that amendment relates, I hope that we shall have an opportunity to consider it.
I support the objections which have been advanced. As other hon. Members have said, this is a very unsatisfactory state of affairs. It is unsatisfactory to the taxpayer. What is more, judging by the terms of the Money Resolution, it must also be rather unsatisfactory to local authorities and other bodies which might at some time receive sums via the Consolidated Fund from the Commissioners of Inland Revenue. I hope that the Minister will be able to say how long the moneys are to be outstanding. When will the local authorities and other bodies which are the eventual recipients get them?
I am sure that the Minister of State is aware from his work in other areas of the very unsatisfactory nature of some company accounts at present. All the provisions of deferred taxation gradually accumulate in a company's accounts and in many cases represent enormous and unreal figures. Here, too, we have sums of money which presumably can accumulate over a period. There is nothing which says that these disbursements have to be made at any particular time.
The economists are familiar with the need to look closely at the velocity of money, and that important factor in the equation has been highlighted again recently. Perhaps we shall have to have a new determinant for the velocity of the movement of tax payments if they are moving in and out of the Consolidated Fund and on to the Lea Valley Regional Park Authority and other local authorities.
Therefore, I support my right hon. Friend in his objection and protest about this matter. I hope that the Minister will say something about how long these sums might be outstanding. It is not only a question of how much money can be outstanding at any one time, but for how long it will remain unaccounted for and how it will be identified.
What provisions is the Minister proposing to make to identify those sums in the Consolidated Fund so that we know that they are owed to somewhere else? How is he proposing that local authorities should identify in their accounts the sums to which they may be entitled in due course and how will they know how much they should expect to receive? In some cases the sums could be quite significant.
All this highlights the very unsatisfactory nature of the proceedings necessary under the Bill to enable local authorities and other bodies to acquire land net of tax. At this early stage in our proceedings I hate to disagree with my hon. Friend the Member for Cirencester and Tewkesbury, but I find merit in the proposal that local authorities should be allowed to buy land net of tax when it is for their own purposes. I am not saying that that is so when the land is bought merely in order to pass it on later. However, I can find little merit in the proceedings by which it is pro-

posed that we should enable this to be brought about. We expect to hear rather more from the Minister in justification of the Money Resolution as a first part of our proceedings.

4.52 p.m.

Mr. Nicholas Fairbairn: I find myself in something of a difficulty, because, while the new clauses are so abstruse as to be incomprehensible, the Money Resolution is so loose as to be meaningless. It is the combination of those two quite improper characteristics of legislation which seems to characterise all modern tax legislation, which spews forh in such abundance from the Government.
The fact that the Government found it necessary to put down so loose a Money Resolution and two such complex new clauses at the end of last week at this stage in this complicated Bill is an indication that no one on their Front Bench understands the proper implications of their legislation. Whatever explanations may be given by Ministers, it seems that the Money Resolution means anything or nothing, because it says—and we should read the terms:
That, for the purposes of any Act of the present Session to impose a new tax on the realisation of the development value of land".
If we have another supplementary Budget this year and the development of land is taxed, this resolution will apply to an Act which no one has yet even framed.
That is a particularly improper form of legislation. If the Chancellor decides suddenly tomorrow that we need to sell to our creditors not only the Dorchester but the Palace of Westminster and that the land shall be used for another purpose, and if he decides to tax it, no doubt that would be covered by this Money Resolution. It seems quite improper that a Money Resolution should not refer specifically to the Act that it is intended to cover.
The only possible explanation of or justification for those words is that the Government still do not understand their incomprehensible, abstruse and idiotic statute and might in this Session have to introduce another with different clauses and regulations and get it to do what they want it to do and not what they imagine it will do. If that is true, let them say


so. Either the resolution should apply to this statute and none other, or the Government should say that they have it in mind to introduce other measures to which it is intended to apply.

Mr. Sainsbury: Would my hon. and learned Friend consider it possible that the total absence from the Chamber of any Labour Members other than those on the Government Front Bench reflects the fact that they are all diligently studying the provisions of the lately introduced new clauses?

Mr. Fairbairn: I hope that they and their legal experts are studying them. I hope that they understand them.
What was absolutely clear—with the greatest of respect to the Minister, whose diligence and application throughout the Committee stage cannot be faulted—was that all present, including the Minister, did not know what was meant. No one on the Benches behind the Minister knew what was meant. If anyone thought that he knew what something meant, that was not what anyone else thought it meant.
We start with Alice in Wonderland. No doubt the development of Wonderland would be subject to this tax. Certainly it should be. It is the only thing that is properly introduced by it.
The Money Resolution goes on:
it is expedient to authorise the issue out of the Consolidated Fund of any sums required to enable the Commissioners of Inland Revenue in certain cases to make to a body by whom an interest in land is acquired a payment in respect of the tax paid on an earlier disposal affecting that land".
Why should "any sums" be required? Why is it "any" sums? Why is it not "the sum"? Is the Treasury to be authorised to pay out of the Consolidated Fund any sums required to enable the Commissioners to make payments in certain cases? The cases are not specified.
We can have all sorts of explanations from the Government, but if they wish to ensure that the cases are purely those arising under New Clauses 2 and 3, let them specify the sort of cases they intend to cover. If it is intended, however, that the vast errors which regularly occur in Treasury calculations should be made up, let us hear that that is the purpose. If it is the intention to introduce further

statutes with other provisions, let us hear about that.
Then we go on to this concept:
by whom an interest in land is acquired a payment in respect of the tax paid on an earlier disposal affecting that land".
What is a payment in respect of the tax payment? Is it equal to the tax paid, or is it more or less than the tax paid? Is it with interest? If the present rate of inflation continues, as it inevitably will under the present Government, and if the tax paid is to be the same sum as that originally paid, it will have to be inflation-proofed upwards. Is that the intention?
What is the meaning of these words? Do they imply that the payment is with or without interest? If the local authority has to borrow the money in order to fulfil its obligations until the money is paid over, however many years later, will the interest thereon be paid? These are the sorts of specific matters which so vague and irresponsible a Money Resolution leaves unanswered.
This matter merits particular interest in Scotland, where there are very big developments and changes in the use of land, very big sums which are paid for the development of land, and very big turnovers. If the Government's assessment is right and the oil around Scotland will be exhausted in 20 years' time, it will be interesting to know whether local authorities in Shetland, Aberdeen, Fife and other places will have received their money before the oil runs out. Here are vast sums of money, all of which are to be removed intact in order to be spent by a spendthrift Government. It is right that local authorities should know exactly the position in which they are likely to find themselves.
The characteristics of this Money Resolution, if anything, compound the frightfulness of the Bill. I make no criticism whatsoever of the Minister, because he is the unfortunate man who has to pretend that this many-legged rogue monster is an intelligent and domesticated beast. However, it does no credit to Parliament, democracy or anything else to have a pair of new clauses such as those proposed. If the 630 Members of Parliament were to write their opinion on the new clauses, or if those who are legally qualified were to give opinion as


to what the new clauses meant, there would be a different answer in every opinion. To have them backed up by so vague and sloppy a Money Resolution is a disgrace to the legislative process.

5.0 p.m.

Mr. Michael Spicer: I had not intended to intervene in this short debate, but my hon. Friend's have raised so many fundamental issues that I am prompted to underline one. My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) has made the point that we cannot have a Money Resolution of whose outcome we have no idea. We have absolutely no concept of what kind of moneys we are discussing. It is a very new form of Money Resolution that we are contemplating unless the Minister can give us some kind of answer about that.
It is not because I have doubts about the Minister's ability in that respect. Those of us who sat on the Committee had considerable regard for his abilities. but I share the view of my hon. and learned Friend the Member for Kinross and West Perthshire (Mr. Fairbairn) that the resolution is so complex that even the Minister often seemed to be at a loss. That may explain why he seemed in Committee to accept so many of our amendments and why we do not find them reflected in the Bill as re-printed—or maybe it was just the lateness of the hour.
If the Minister is trying to meet us, particularly my hon. Friend the Member for Cirencester and Tewkesbury, we must have some idea of what the yields will be. This is fundamental. Here for the first time we are considering a tax on hypothetical values. That will make it extremely difficult for the Minister to produce any kind of yield estimate. We are not trying to work out the kinds of sales which are contemplated and, by putting a figure for inflation against those sales, thereby coming up with an estimate of yield. We are not talking about a tax on anything real. What we are talking about is often a tax on nothing, a tax on some kind of hypothetical valuation.
The point that we are raising about yield goes to the very root, certainly of my objection, of the opposition to the entire tax. Here we have a tax on a

hypothetical value which will make it extremely difficult for the Minister to give any kind of estimate of what kind of moneys we are talking about.

Mr. Michael Latham: Is my hon. Friend aware that under New Clause 3, which the Minister will be moving, the gain is not only hypothetical but also illegal?

Mr. Spicer: That is an extremely interesting point. I have just had a message passed to me by my hon. and learned Friend the Member for Kinross and West Perthshire pointing out that the Scottish National Party is not here. Perhaps it is also studying the details of the Money Resolution.
I do not want to labour this point because we shall come back to it, but it is fundamental to any discussion of this Money Resolution that we should have an estimate of the yield. This is not only appalling but an appalling piece of legislation.

Mr. Stephen Ross: The hon. Gentleman says it is appalling, but would he not agree that there should be a tax on land transactions and that this is a rather better piece of legislation than his own Government brought in, namely, the development gains tax? It has particular advantages, particularly in the opinion of professional circles.

Mr. Spicer: That needs the kind of response which one's own spokesman should make. I can only give the hon. Gentleman my own personal view and I absolutely dispute his view. A tax on gains is a tax on something real. This is a tax on a hypothetical value.

Mr. Sainsbury: My hon. Friend seemed to accept the accusation of the hon. Member for Isle of Wight (Mr. Ross) that the development gains tax was legislation passed by his Government. He can personally disclaim all responsibility because he was not an hon. Member at the time concerned. I remind his that although the legislation was envisaged in the December 1973 Finance Act introduced by Mr. Barber, now Lord Barber, the legislation was in fact enacted by the present Government's predecessors and the process of consultation which would have been undertaken and which would have substantially amended the Bill in respect of observations which had been


made by the professional associations to which both the hon. Member for Isle of Wight and myself have the honour to belong would have greatly changed it had we been responsible for the legislation which the hon. Member for Isle of Wight has just criticised.

Mr. Spicer: I accept that absolutely.

Mr. Ridley: Before we have too much razzamatazz on this subject, may I point out that I was a member of the Standing Committee which considered the development gains tax legislation and one of the 10 per cent. of the rivals for the Liberal leadership—the hon. Member for Cornwall, North (Mr. Pardoe)—was also on the Committee and he found considerable fault all the way through with the concept of development gains tax?

Mr. Spicer: I am sure that all that is extremely helpful.
The only point I want to make in response to the hon. Member for Isle of Wight is that the concept of a development gains tax is infinitely preferable because it is a tax on something genuine—on a gain. It is a tax on something which we can identify. In this case we have a tax on something which is totally hypothetical. Once we start to introduce a tax which is based upon some hypothetical valuation, it is often subject to personal and subjective interpretations. One is then faced with the problem of trying to provide some kind of estimate of the tax yield. There are countless problems once we get into the business of taxing hypothetical valuations which no doubt, we shall be discussing later tonight.
However, the one point to which I wish to draw attention that once we have a hypothetical tax, it will be difficult to respond to the probings particularly of my hon. Friend the Member for Cirencester and Tewkesbury who asked, quite rightly, for some kind of estimate. If we cannot have an estimate of the sort of money we are talking about, I for one find this Money Resolution objectionable.

Mr. Fairbairn: Mr. Speaker, I should earlier have declared an interest, which I omitted to do. I am the owner of some 500 acres of land which may be subject to this Bill. Like my hon. Friend the Member for Brighton and Hove I trust that it will never be developed.

Mr. Sainsbury: My constituency is Hove.

Mr. Fairbairn: I meant my hon. Friend the Member for Hove (Mr. Sainsbury). I apologise for enlarging his interests. I trust my land will never be subject to an interest, but, under the provisions of the Bill, even if it is never developed I may have to pay tax on the loss of amenity which a neighbour creates over my land.

Mr. Denzil Davies: Perhaps I may deal first with the main point made by the right hon. Member for Crosby (Mr. Page), who rightly chastised us for putting down the two new clauses and the Money Resolution at such a late stage. I accept what he said. If we had thought of it, we would have put them down earlier, but we did not think of it. We put them down at the first moment we could, but it was late and I apologise. At least the House should give us thanks for enabling hon. Members opposite to raise all these issues again. They have this opportunity at the beginning of the Report stage on a sunny afternoon.
The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) showed a clear grasp of the Bill although he has not read the Cabinet minutes and was not on the Standing Committee. I wish that he had been on the Committee, since he could have assisted us no end.

Mr. Ridley: Why do we not accept the suggestion of the hon. Member for Rugby (Mr. Price) and hold all Cabinet meetings at Hyde Park Corner? Then we could all know what was going on.

Mr. Davies: On a day like this, that is a very attractive idea. Perhaps we could also hold the Report stage of the Bill there.
The hon. Member asked what amount of tax would be paid over to the local authority. It is the amount which would have been payable if the original acquisition had taken place. In other words, three parties are involved. Mr. A has a piece of land and the local authority intimates an intention to acquire it. Mr. A disposes of it to Mr. B at full market value, so when the local authority acquires the land from Mr. B, there is a high base value and the local authority can deduct no tax because there is none to be deducted.
The intention behind both new clauses is basically the same—that the tax which would have been payable by Mr. A—not the tax deducted by the local authority: that might have been different—had the sale gone through to the local authority, presumably with a lower base value, will be paid over to the local authority in the circumstances provided for in New Clause 2. But there is no question of having to pay over more if the values increase between the two sales.
We are concerned with the first potential sale or acquisition and the amount of tax which would have been payable on that acquisition. That is the fixed amount of tax which would be paid back to the local authority if the Money Resolution and the new clauses were accepted.
The hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) reminded us in Committee that he owns 500 acres of burgage property in Scotland. He said that the Money Resolution was drafted vaguely and that we would not know what would be paid out. But the Treasury cannot pay money to anybody in pursuance of the resolution. The resolution merely gives a cloak of authority to statutory authority. If the new clauses are not passed, the Treasury could not pay any money out under the resolution. The ability to pay the money is circumscribed by the two new clauses. Thus, the hon. and learned Gentleman's criticisms of the Money Resolution are not entirely valid because we are not paying money out as a result of the resolution.
In fact, we are not paying money to private bodies. The money is still within the private sector. Again, we are not concerned with the kind of Money Resolution which we sometimes see after Orders late at night when money may be paid out to a private oil company and a Money Resolution is needed to reinforce the Order. We are concerned with money which would otherwise have gone to the Revenue and is then recirculated to the local authorities in the limited number of cases dealt with in the two new clauses.
I was asked how much money would be paid from the Revenue to the local authorities. I cannot give the answer to that, but it would be a very small

amount, because we are concerned with a very limited area in which there might be forestalling—it would be rare: in most cases, it would just not happen—and where development might start without authorisation under New Clause 3. The amount of money paid out would be very small, especially bearing in mind the fact that the two new clauses would to some extent deter owners of land from operating in the way in which they would otherwise operate.
I am sorry to disappoint hon. Members but I cannot give a figure, therefore, of how much money would be likely to be paid out, but it is likely to be very small. We are in some difficulty because we are debating the Money Resolution first and will then have to debate the new clauses afterwards. But perhaps the details of the new clauses and the way in which the money is paid will depend on the specific details of the new clauses themselves. The House can reject the new clauses, in which case the Money Resolution falls. The resolution will give procedural effect to the new clauses if they are passed.
The hon. Member for Hove (Mr. Sainsbury) and, more strongly, the hon. Member for the Isle of Wight (Mr. Ross) agreed that it was a good thing for local authorities to acquire land net of tax. The new clauses and the Money Resolution ensure that this shall happen within this legislation. In fact, they are to put that into effect and to prevent the forestalling of that—which purpose some hon. Members approve in a limited number of cases—by sales made between individuals, possibly in order to prevent the local authority from acquiring the land.

Mr. Graham Page: Of course, it is not only to deal with forestalling. Any private transaction can take place quite properly and legally while a compulsory purchase order is hanging over the owner's head. These clauses do not prevent that. This is nothing to do with the owner, whether he sells or not. It is now only between the board and the local authorities.

Mr. Davies: Indeed, but if the owner has entered into an unconditional contract to sell the land, even if the local authority issues a notice, New Clause 2 will not operate. It will operate only where a local authority has intimated by


notice that it wants to buy the land and then the owner enters into a contract to dispose of it to another person. But I agree that, at the end of the day, this is a matter between the board and the local authorities. It has nothing to do do with the rights of individuals and private owners and the sales will go through in exactly the same way.
I hope that the House will accept at least that the Money Resolution fortifies the two new clauses, which we shall no doubt debate later.

Mr. Ridley: I am grateful to the Minister for having given—

Mr. Deputy Speaker: Order. I do not know whether the hon. Gentleman is making an intervention, but he has already spoken once on the Money Resolution.

Mr. Ridley: But we are not yet on the Report stage. Is it not in order for me to seek to comment further on the issues before us?

Mr. Deputy Speaker: No, that is not so. One may interrogate by way of an intervention, but one may not make another speech on a Money Resolution.

Mr. Ridley: In that case, may I ask the Minister, before he sits down, what happens if the land is sold when a compulsory purchase order is pending and it is sold quickly to three or four different people, each of whom buys it and sells it on to the next in such a way that at no stage does development land tax arise because there are always the exemptions to take? In that case, the Treasury will repay to the local authority the tax which would have been paid if the local authority had been able to acquire the land in the first instance.
But in fact no tax will be paid to the Treasury. This seems to be an admirable way for local authorities to milk the Treasury. I can see that it would be possible to ensure that there were six or seven private owners all ready to acquire the land and pass it on quickly, thereby entitling the local authority to large sums of tax from the Revenue without any development land tax being paid. As a well-known stopper of loopholes, I am sure that the Minister will be grateful for that point.

Mr. Davies: I am grateful. I am even more sorry now that the hon. Gentle

man was not on the Committee. If no tax is to be paid to the Revenue on the first sale—he postulated a sale from one to the next of three or four sellers—there will be no tax to be paid back to the local authority. This provision applies only in a situation where there is tax payable on the first sale, which is paid to the Revenue, but which would have been paid to the local authority if the authority had acquired the land from the first person, Mr. A. There is no question of milking the Revenue.

Mr. Fairbairn: Would the Minister make that absolutely clear? Surely the position would be that if the tax had been payable to the local authority, the Treasury must repay it to the local authority.

Mr. Davies: The tax will be payable either way. If the local authority buys Mr. A's land and tax is payable, that tax will be paid to the local authority. If Mr. A sells to Mr. B, the same amount of tax will be payable because the computation will be the same. But that tax would go to the Revenue, because Mr. A will have sold to a private person instead of to a local authority. All New Clause 2 provides is that the tax would be recycled back to the local authority. If Mr. A sold to Mr. B, there would be no question of any more tax being paid or of any different tax being payable.

Mr. Ridley: But if Mr. A does not sell to a local authority but sells to Mr. B instead, who then sells to Mr. C, who then sells to Mr. D, so that at no stage does a tax liability arise, the local authority can justly claim back from the Revenue the tax which would have been paid if Mr. A had sold to the local authority in the first place.

Mr. Davies: If Mr. A sold to a local authority and the tax payable was £20,000, for example, the tax would be exactly the same if he sold to Mr. B instead. There is no difference as far as assessing the tax is concerned. In these circumstances the local authority would get the benefit of the £20,000. If no tax is payable on that sale, no money would go to anybody, either the Revenue or the local authority.

Question put and agreed to.

Resolved,
That, for the purposes of any Act of the present Session to impose a new tax on the


realisation of the development value of land, it is expedient to authorise the issue out of the Consolidated Fund of any sums required to enable the Commissioners of Inland Revenue in certain cases to make to a body by whom an interest in land is acquired a payment in respect of the tax paid on an earlier disposal affecting that land.

New Clause 1

DEVELOPMENT FOR INDUSTRIAL USE

'(1) Subject to section 20 below if, in a case where realised development accrues to the chargeable person on the deemed disposal of an interest in land (in this section referred to as "the relevant interest"),—



(a) the chargeable person carries on a trade, and


5
(b) the project of material development, the beginning of which is the occasion of the deemed disposal, relates to a building or other land to be used, in whole or in part, for the industrial purposes of that trade,


10
then, subject to the following provisions of this section, liability for development land tax on such proportion of that realised development value as is properly attributable to property to be used for the industrial purposes of a trade carried on by the chargeable person shall be deferred until the occasion of the first subsequent disposal of the relevant interest which is neither—



(i) a deemed disposal; nor


15
(ii) a disposal to which either section 20(1) below or subsection (1) or subsection (4) of section 22 below applies; nor



(iii) a disposal which forms part of a sale and lease-back transaction.



(2) For the purposes of this section, a building or other land constitutes property used for the industrial purposes of a trade carried on by any person if and to the extent that—


20
(a) it is used in the course of such a trade for the carrying on of any process for or incidental to any of the purposes specified in paragraph (a) of Class E in paragraph 7 of Schedule 4 to this Act or for or incidental to the generation of electricity, or


25
(b) it is used, otherwise than as a dwelling-house, for the welfare of workers employed in such a trade,



and any reference to property to be used for such purposes shall be construed accordingly.



(3) For the purposes of this section, premises which—


30
(a) are used or designed for use for providing services or facilities ancillary to the use of other premises which, in accordance with subsection (2) above, constitute property used for the industrial purposes of a trade, and



(b) are or are to be comprised in the same building or the same curtilage as those other premises,



shall themselves be treated as falling within paragraph (a) or paragraph (b) of subsection (2) above.


35
(4) In any case where it appears to the Board or, on an appeal, to the Commissioners concerned that a project of material development falling within paragraph (b) of subsection (1) above relates exclusively to property to be used for the industrial purposes of a trade carried on by the chargeable person, the proportion of realised development value referred to in that subsection shall be 100 per cent., but, in any other case—


40
(a) the proportion properly attributable to the property to be used for the industrial purposes of such a trade, and



(b) the method of apportionment adopted,



shall be such as appears to the Board or, on an appeal, to the Commissioners concerned to be just and reasonable.


45
(5) Subject to subsection (6) and section 20 below, if—


50
(a) the whole or any part of a building or other land to which a project of material development falling within subsection (1)(b) above relates ceases at any time, otherwise than on the occasion of a disposal of the relevant interest, to constitute property used by the chargeable person referred to in subsection (1)(a) above for the industrial purposes of a trade for the time being carried on by him, and



(b) at that time or at a subsequent time either that person ceases to carry on any trade at all or a non-qualifying use is established for the building or other land or part thereof to which paragraph (a) above applies,


55
the relevant interest or, if paragraph (a) above applies to part only of the building or other land, so much of the relevant interest as subsists in that part shall be treated for the purposes only of subsection (1) above and section 27 below as having been disposed of at the time when the condition in paragraph (b) above is fulfilled.



(6) Subject to section 20 below, for the purposes of subsection (5) above, a non-qualifying use is established for any building or other land or part thereof if, for at least half

Orders of the Day — DEVELOPMENT LAND TAX BILL

As amended (in the Standing Committee), considered.

60
of any continuous period of twenty-four months, it is used in such circumstances that it does not constitute property used for the industrial purposes of a trade carried on by the chargeable person; and accordingly the non-qualifying use shall be taken to be established at the expiry of the 365th day in that period on which the building or other land or part thereof is so used.


65
(7) For the purposes of this section a disposal of the relevant interest (in the following provisions of this section referred to as "the primary disposal") forms part of a sale and lease-back transaction if—


70
(a) it is either a disposal of the whole of the relevant interest or a part disposal of that interest which falls within paragraph (b) of subsection (1) of section 3 above; and


75
(b) it forms part of a transaction whereby, at or immediately after the time at which the relevant interest or, in the case of a part disposal, the granted interest is acquired as a result of the primary disposal, the person by whom that interest is so acquired grants a lease to the person who was the chargeable person in relation to the primary disposal; and



(c) the lease subsists in the whole or any part of the land in which the relevant interest or, as the case may be, the granted interest subsists.


80
(8) If, after the primary disposal, there is a disposal of the lease referred to in paragraph (c) of subsection (7) above, subsection (5) above shall have effect as if, at the time of that disposal, the conditions in paragraphs (a) and (b) of that subsection were fulfilled with respect to so much of any building or other land as is the subject matter of the lease.


85
(9) If, in a case where the primary disposal is such a part disposal as is referred to in subsection (7)(a) above, there is a subsequent disposal of the interest which is the retained interest in relation to that part disposal, subsection (1) above and section 27 below shall apply as if in place of, but to the like effect as, that subsequent disposal there were a part disposal of the relevant interest.


90
(10) For the purposes of subsections (1) and (5)(a) above, a disposal shall be treated as a disposal of the relevant interest if it is a disposal of an interest in land of which the relevant interest is a part for the purposes of Part I of Schedule 2 to this Act.'.


—[Mr. Denzil Davies.]

Brought up, and read the First time.

5.23 p.m.

The Minister of State, Treasury (Mr. Denzil Davies): I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Mr. Oscar Murton): With New Clause 1 we are to take Government Amendments Nos. 55 and 63 to 68 inclusive.

Mr. Davies: I shall explain to the House why this new clause has been put on the Order Paper at this stage. Hon. Members opposite succeeded in convincing the Standing Committee that Clause 19, which gives deferment from development land tax for industrial use, should be extended to cover commercial use, with the exception of offices. I said in Committee that the Government would consider their reaction to this and that I had some sympathy with the arguments. I did not give a commitment that we should seek to change the position on Report, and, having considered this matter in detail, we have decided that we do not want to extend the deferral of the tax to cover commercial use at all. That is why this new clause and the consequential amendments appear on the Order Paper.
We are debating a new clause which is basically similar to the original Clause

19 before it was amended in Committee. There are some differences, because there were difficulties in drafting the original Clause 19, and in the new clause we have put right some of these anomalies. However, in substance it is the same as the original Clause 19.
I see that hon. Gentlemen opposite have put down an amendment to extend deferral even further to include all commercial developments, even offices. We debated this matter at length in Committee.
Originally it was not intended that there should be any deferral for even industrial use. The Government felt that it was not right to give exemptions of any kind. But representations were made to us that this might inhibit the development of factories and industrial land because many industrialists own land which they may wish to use to expand their factories.
As a result of representations, and because of the appalling state of British manufacturing industry and the problems of the last 25 years, the Government felt that they would not want to do anything that some people might think would deter industrial development. In the light of this, we gave a limited exemption.
But once that kind of exemption has been given, there are demands for extending it, and these demands led to the


amendments from Opposition Members in Committee. But I cannot accept the amendments, because our exemption was a specific one to help industry, and we draw a distinction between industrial and commercial development. This distinction can be drawn in the light of the present state of British manufacturing industry compared with the fairly thriving state of commercial development.
There is no shortage of commercial development and no lack of profit in this area. One has to contrast that with industrial development, which has lagged far behind in this country ever since the war, and even before.

Mr. Robert Adley: Is the Minister saying that he can help manufacturing industry by hampering and hindering commerce?

Mr. Davies: We are not helping manufacturing industry by hindering commerce, because we are not concerned here with the same kind of development. We are concerned with industrial development, which in most cases is different from commercial development. We are concerned with factories, as opposed to hotels and offices. In 95 per cent. of cases they are mutually exclusive. The fact that we give this exemption to industrial development and not to a shopping precinct does not mean that we are penalising one for the other, because the two cases are quite different.
I do not accept that we are hampering one to help the other. We are giving an additional incentive to industry and to industrial development. We have to try to improve the base of our manufacturing industry, and we are merely giving it an additional incentive to try to bring it up to the level of commercial development which has been thriving.

5.30 p.m.

Mr. Andrew Bowden: Does the Minister accept that towns like mine depend very largely upon the tourist trade? We are in the process of building a large new conference centre in Brighton which will attract a good number of international exhibitions. It will earn a great deal of money for this country. Does not the Minister accept that we need to encourage rather than penalise the hotel and catering industry?

Mr. Davies: No one has suggested that

that industry should be penalised in any way. It is not being penalised. That kind of development has been very profitable. One has only to travel around Britain to see how commercial development has been thriving while industrial development has suffered from a lack of funds and investment. We are trying to assist industry by not including in the Bill a provision which might be thought to impede industrial development.

Mr. Michael Spicer: How can the Minister argue that to impose a lax and then to remove it for one section is actually to assist that sector? How can he argue that when he maintains that the tax on another sector is not penalising it? I do not follow what he is saying.

Mr. Davies: I do not think we ate penalising it, because many cases are mutually exclusive. There are different developments and different operations. We are dealing with hotel, office and commercial developments on the one hand and with factories on the other hand. We are not penalising commercial development. We are giving an advantage to industrial development in the form of the deferral of the tax. We are not saying that industrial development shall not pay the tax. We are saying only that it will be deferred from the commencement of the development where an industrialist develops land for his own use.

Mr. Adley: Will the Minister deal with the case where a hotel buys land intending to extend upon it at a future date and thus create more jobs? What is the position in those circumstances?

Mr. Davies: If the act of extending on to the land throws up a development or betterment profit, the tax will be payable at that point. Commercial development for own use does not enjoy the deferral, but industrial development for own use does enjoy it. If an industrialist sells the land, or if other factors are taken into account and trigger oil the tax, he pays the tax.
By giving exemption to industrial own use, we are to some extent creating a distortion and an unfairness, because the developer who develops on a new site not for his own use may pay the tax. That creates a discrimination


between the normal property developer and the industrialist who develops on his own land.
I appreciate that there are arguments on both sides. Conservative Members cannot see the importance of distinguishing between industrial and commercial development. If industry had thrived as much as commerce in the last quarter of a century, it would not have been necessary to include this exemption, but because it has not been thriving we must give every opportunity to enable it to do so. The clause would overthrow Clause 19 as amended in Committee.

Mr. Tim Sainsbury: I recall rather unhappy comment on one occasion on the performance of the football team which my hon. Friend the Member for Brighton, Kemptown (Mr. Bowden) and I support. It was "I am glad to say that, having started the season badly, it has got a great deal worse." I hope that the Report stage of the Bill will not follow a similar course. We certainly seem to have started badly for a number of reasons, not least that it seemed that the Minister, doing his best, did not really have his heart in the new clause or in turning back the amendments to the original Clause 19 as accepted in Committee.
My objection is not only to what the Government are proposing but to the method. It is strange that we should be presented with a clause very similar to the original unamended Clause 19 instead of being presented with the appropriate amendments to correct the drafting defects. I am surprised that the Minister should feel it necessary to try to remove the amendments made in Committee. Our objection goes even further than to what is being done and how. It should extend, I believe, to those who are doing it.
I intend no criticism of the Minister when I say that it is strange that when a matter of considerable importance to the retail and the hotel and catering trades is discussed the sponsoring Department for those industries is not represented in the debate. The new clause is not entirely the same as Clause 19 and the Minister has not told us much about some of the changes. I hope that he will explain one or two of them when he winds up.
I do not think that the change in subsection (2)(a) from "that" to "such a" is one we need to spend too long on.
I am interested to see the words at the end of that paragraph which refer to property which is
for or incidental to the generation of electricity".
Those words are completely superfluous if the generation of electricity is a process incidental to the industrial process. The implication of putting in these words is that the generation of electricity for resale is included in this category. I should be grateful if the Minister would say something on that.
I also ask the Minister to look at the words in subsection (5)(a) and (b) which have been changed since we were dealing with Clause 19. The last line of paragraph (a) includes the words "for the time being", and the second line of paragraph (b) includes the words "at all". I hope I am correct in assuming that those words have been added in response to what was said in the commendably short debate in Committee, when I moved Amendment No. 355, and the Minister gave us an undertaking that he would bring forward an amendment on Report to meet the point I had in mind. I hope I am correct in assuming that those words have been put in to meet that point.
The main point is this discrimination—I think that is the right word—against commerce in all its guises. Perhaps in this House we tend to exaggerate the diligence and care with which the public attend to the details of our proceedings, and, indeed, the attention they pay to the precise words spoken, particularly those spoken from the Treasury Bench. In legislation as complex as this, even if close attention is paid to it, I should be slightly surprised if everyone were able to comprehend entirely the meaning of it. I think we would all agree that what is important here is the impression that is given. That will be of importance in relation to the confidence and the morale of the interests concerned.
I have the very strong impression, from what the Minister has said, that an old discrimination, which seems to be ingrained in the Socialist approach to many aspects of life, is coming out again. The phrase "ordinary working people" is frequently used in such a manner that it


seems to exclude from that category such people as managers, designers, salesmen—indeed, presumably Members of Parliament. But perhaps that is a bit of special pleading. We find that there is, in the Socialist image of the world, an idea that ordinary working people can only work in a factory, and that there is something mysteriously virtuous in being on the shop floor. If someone gets promotion and is sent out to sell, perhaps overseas, the product that is manufactured, he ceases, it would appear, to be an ordinary worker. It would appear that he loses status by going to work in an office.
I find it a very strange and disturbing approach that retailers, people who work in the vitally important catering and hotel trade, and in offices, seem to lack respect in Socialist eyes.
I thought I detected a lack of enthusiasm from the Minister when he moved the clause. Perhaps he was responding to pressures from elsewhere, but I know not. I hope that we shall hear at length, for example, of the views of the very important and long-established co-operative movement on this particular point.
I hope that the Minister will be able to do a little better on the rest of the new clauses. He seemed to be arguing that industry is a total disaster area, and that there is such an all-embracing lack of success in industry that anything which might in any way inhibit development in industry should be avoided. If we were to see a sudden conversion to this idea and it were very effectively pursued through the different aspects of the Government's legislation, I am sure that it would be very welcome. If the Government would reflect whether the Dock Work Regulation Bill might in any way inhibit industrial development and, having so reflected, if they were to withdraw that absurd and unwanted piece of legislation—unwanted even by many on their own side—they might be doing something useful and helpful for industry.
5.45 p.m.
Here the Government seem to have detected a genuine obstacle which would indeed deter the industrialist from development. The industrialist is not usually an expert in property matters. An industrialist may have some land on

which he hopes to carry out an extension. He may know what the land cost him initially or it may have been bought as part of a much larger parcel, in which case he may not have a separate price for it. Suppose he wishes to carry out an extension and calls in his experts, who then say that, were it not for New Clause 1, he would be liable for development land tax. The industrialist will then say "Thank you very much for New Clause 1", in exactly the same way as the retailer, the hotelier, or any other commercial developer, might say it. Even then the industrialist will only get deferral.
The Minister, probably by a slip of the tongue, referred at one moment to exemption. We are concerned with referral, not exemption.
This brings me back to a point I mentioned in the short debate on the Money Resolution—that the build up of all these deferrals in company accounts is a thoroughly undesirable matter. If we are to have deferrals of this nature we ought to look at the question of having them expunged from the record after a stated time. If inflation continues to gallop along in the way in which it has been the tax payable after 10 years will be very insignificant. Even so, the accumulation of deferred liability for tax in company accounts, and particularly in the case of smaller companies, is a thoroughly undesirable feature, and something we should endeavour to avoid.
The Minister has advanced the argument that we need New Clause 1 instead of amended Clause 19 because of the difficult state of industry. He contrasted it with a world of booming prosperity, as far as I could see, in commerce. I do not know how closely the Minister studies the reports of the Price Commission on the state of the retailing trade, or whether he believes what he reads, but he will not find quite such glowing prosperity indicated there. There has been a reported downturn of 25 per cent. in the amount of new construction orders for retailing. There does not seem to be too much evidence of booming prosperity there.
I wonder if the Minister has read of some of the difficulties experienced by the hotel trade at the present time. A number of bankruptcies have been reported, and developments have been stopped or deferred. The prosperity is not as wide


spread as he suspects. Not every hotel has a bid for it in terms of millions of pounds from the Middle East.
I wish to make it absolutely clear that we are in no way criticising the relief for industry. We welcome it, and think that it is very valuable. We are glad that the Government have recognised, in this piece of legislation at least, if not in others, that they should try to avoid inhibiting industrial investment. Our complaint is about the thoroughly artificial division between industry and all other activities in which people are employed and producing earnings in this country.
I have already declared my self-evident interest in retailing. I hope the Minister is aware of the report on industrial strategies in the distributive trade prepared under the auspices of the National Economic Development Office by a working party under the chairmanship of Mr. W. T. Welch, a very distinguished executive of the co-operative movement. The report said:
The rôle of the distributive trades is to provide a convenient way in which the public may obtain the goods they want, thus meeting their constantly changing requirements, in such a manner as to make a profit on the resources employed. In carrying out this role, distribution adds about £8½ billion to the gross domestice product, employs over 2½ million people, and is an important tourist attraction.
I do not believe that a single industry can begin to approach those figures. They are an indication of the importance of retailing to this country. The report went on:
Any degree of inefficiency in the distribution system would impair efficiency in manufacturing and weaken the competitive strength of our production system as a whole.
Later, it displayed a rare foresight of what was to happen on the Government side when it said:
There were doubts whether this was fully appreciated by those on both sides of industry and government who are influential in the formulation of policy and public opinion, with the result that a number of measures taken to influence economic development have seriously increased the difficulties under which the distributive trades are having to operate, particularly during the current recession.
I hoped the Minister would have studied this report and agreed with the working party that fiscal equality between distribution and manufacturing is logical and fair.
I referred earlier to the importance of the impressions we give in the House. A certain impression was given by the Chancellor of the Exchequer when he wrote to the Chairman of the Retail Consortium on 4th December last year saying:
I accept the view that in principle commercial buildings should receive capital allowances. The difficulty—which I fear is a very serious one, particularly at the present time—is the cost. I think you will understand that we could not give the allowances to buildings used in the retail trade without also giving them to commercial buildings generally.
We are not concerned here with the cost. That is not a factor presented by the Minister in support of his case. I fail to understand why, as the Chancellor wrote seven months ago saying that he accepted the principle of capital allowance, they cannot appear here now.
The Retail Consortium speaks for practically everybody in retailing. It includes the Co-operative Union, the Mail Order Traders' Association of Great Britain, the Multiple Food and Drink Retailers' Association, the Multiple Shops Federation, the National Chamber of Trade, the Retail Alliance, the Retail Distributors Association and the Scottish Retail Federation. Its reaction to the Chancellor's letter was:
It is particularly regrettable therefore, that in spite of past statements and agreements in principle, far from rectifying some of the inequities, this new legislation is to add further fiscal discrimination between manufacturing industry and retail distribution.
I do not think industry would regard the Minister's explanation of the new clause as adequate. It is clear that retailing organisations, like industrialists, very often have land which is available for extension and which they may have owned for some time. It is also clear that, at present and for some time to come, there will be far fewer large-scale redevelopment projects. We have rightly taken a new view about some of the massive programmes of destruction and rebuilding we have seen in the past, and much greater emphasis is now being paid to renovation, enlargement and improvements in the functional efficiency of existing buildings. By attempting to refuse this concession to retailing, the Minister is giving discouragement in a vital area of the economy at exactly the wrong moment.
I hope the importance of tourism to the economy is recognised by the Government. I am sure there are those on this side who, from positions of great knowledge of the industry, will describe that importance much more ably than I can. I was impressed by a document "Tourism in Britain—The Broad Perspective" issued in January this year, the same date as the NEDO publication to which I referred earlier. The document on tourism carried the same authority, by reason of its authorship, as did the other document. It was a joint report by the British Tourist Authority, the English Tourist Board, the Scottish Tourist Board and the Wales Tourist Board. I hope the last name at least will strike a chord in the Minister's heart and perhaps enable him to soften in his attitude on this matter.
One of the most salient points in the report is that Britain was comparatively late in recognising the economic advantages of developing tourism. The Labour Government of 1966 to 1970 introduced for the development of hotels encouragements which were particularly unfortunate because they concentrated mainly on London and at the top end of the market. It is clear that far more of the money and encouragement should have gone to provincial hotels and the middle and lower end of the market.
I hope the Minister will read the report. It is clear that there are problems for those in the hotel and catering trade in meeting the requirements to enable us to continue to respond to the considerable opportunities in the growing international tourist trade so that the nation can derive substantial benefits from it. The report says:
One of the biggest weaknesses in tourism in Britain is the difficulty of containing costs to cope with inflation and so to remain competitive. Increased operating costs threaten the viability of recent investments and the high cost of capital has inhibited new investment of the conventional kind.
That is a direct reference to the difficulties the industry is having in carrying out investments.
The report says later that there are certain imbalances in the supply of hotels. There is a surplus of higher-priced accommodation, but the forecast growth in demand is mainly for lower-priced hotels. This situation poses long-

term problems for hotels, because it is not considered profitable to build and operate conventional hotels for lower-priced accommodation, especially in London.
This is a critical time for the industry. It has considerable opportunities in the international growth in tourism from which we have been able to derive fairly substantial benefits and from which more may be obtained. The Minister is putting an obstacle in the way of the industry.
The British Hotels, Restaurants and Caterers Association wrote recently to the Under-Secretary of State for Trade. It stated:
This amendment is of immense importance to the tourist industry, of which the hotel and catering industry is the largest single sector, because without it the Bill's provisions for the charging of development land tax on a single 'deemed disposal' could seriously inhibit the development of tourist amenities and facilities, such as the extension or enlargement of hotels and restaurants.
It could not have made the matter clearer, but the Minister seems to be turning a totally blind eye to that aspect.
The industry, like the retailing industry, could feel that its representations, importance and needs have been totally under-estimated by the Minister. Judging by the current attendance on the Government Benches and the absence of ministerial support for the industries to which I have referred, it is apparent that the Government have little feeling for retailing or the tourist trade.
6.0 p.m.
The Minister has advanced no rational argument for a need to introduce a fresh degree of fiscal discrimination against commerce. Anyhow, there is the difficulty of drawing the line between industrial and commercial operations. I do not need to go right through all the arguments about SET, but the example of warehousing is worth mentioning. Under SET a warehouse operation, if attached to industrial operation, drew a premium. If it was an independent, freestanding operation it was neutral. If it was attached to a retailing operation it had to pay a surcharge. The identical operation under SET could be subject to three different tax treatments. Warehousing, like retailing, is an integral part of the complete industrial process.
To try to draw these arbitrary and artificial lines and to discriminate against commerce, which is what the Minister is proposing, is not only difficult but damaging. There is no third party involved. We are not concerned with a tax loophole. I am glad that the Minister has not advanced that claim as an argument to support the clause.
There seems to be a total contradiction between the Minister's approach and what the Chancellor wrote in his letter of 4th December. The Minister, through the devious method of introducing a new clause instead of submitting amendments to Clause 19, is totally under-estimating and under-valuing the importance of commerce to the economy. He has misrepresented a very valuable development, especially in retailing and in the hotel and catering trades.
It is for those reasons that I hope my right hon. and hon. Friends will join me in opposing the clause and seeking to retain Clause 19 as it was amended in Committee.

Mr. Adley: First, Mr. Speaker, I seek your guidance. I ask whether it is admissible and whether it is your intention that with New Clause 1 we take the amendments which have been selected in a group—namely, the folowing:

Government Amendments Nos. 55 and 63 to 68.

The following amendments to the proposed New Clause 1:

(a) in line 7, after 'industrial', insert 'or commercial'.
(b) in line 10, after 'industrial', insert 'or commercial'.
(c) in line 21, leave out paragraph (a) of'.
(d) in line 37, after 'industrial', insert 'or commercial'.
(e) in line 40, at end insert 'or commercial'.
(f) in line 50, after 'industrial', insert 'or commercial'.

Amendment No. 56, in Clause 19, page 29, line 37, leave out 'other than for offices'.

Amendment No. 57, in page 29, line 42, leave out 'other than for offices'.

Amendment No. 58, in page 30, line 11, leave out 'paragraph (a) of'.

Amendment No. 59, in page 30, leave out lines 22 to 24.

Amendment No. 60, in page 30, line 37, leave out 'other than for offices'.

Amendment No. 61, in page 31, line 5, leave out 'other than for offices'.

Amendment (g) to the proposed New Clause 1, in line 90, at end insert—
'(11) For the purpose of subsection (1) there is no first subsequent disposal by reason only of the receipt of a sum under a policy of insurance against the risk of any kind of damage to, or loss of a building'.

Amendment No. 62, in Clause 19, page 32, line 13, at end insert—
'(11) For the purpose of subsection (1) there is no first subsequent disposal by reason only of the receipt of a sum under a policy of insurance against the risk of any kind of damage to, or loss of a building'.

I think that that was the intention, Mr. Speaker, but I should be grateful for your confirmation.

Mr. Speaker: That is not exactly as I put the grouping before the House, but if it is for the convenience of the House I think it would be a good thing to take the amendments together. They cannot be proposed at this stage, but they may be discussed together.

Mr. Adley: I am grateful, Mr. Speaker.
First, I declare an interest, as I did some few hours ago, as European Marketing Director of Commonwealth Holiday Inns of Canada Ltd. and a member, unfortunately unpaid, of the National Executive of the British Hotels Restaurants and Caterers Association, to which my hon. Friend the Member for Hove (Mr. Sainsbury) has recently referred. Unfortunately, I am merely an executive of that company, but I have a reasonable day-to-day working knowledge of what goes on. Perhaps it might be possible at some stage in our proceedings to find some way of declaring statutorily that one has an interest in certain matters when one raises them in the House for debate. If such a declaration is not made, one is in danger of being accused of advertising!
The Development Land Tax Bill spent a long time in Committee. I have done my best to plough through as much of it as I can. First, I congratulate my hon.


Friend the Member for Hove on the way in which he moved his amendment during the nineteenth sitting, which has resulted in the Government bringing forth the new clause. I have read most carefully what he said—column 1020—and I have also read what the Minister said. The hon. Gentleman stated:
the Government are not seeking to be beastly to nasty commerce and good to industry."—[Official Report, Standing Committee J, 6th May 1976; c. 1030.]
That may be the spoken intention of the Government, but I am bound to say that it is not the impression that we have gathered during the past two years as we have faced motion after motion, Bill after Bill, and Order after Order from the Government, every one of which seems to have had the declared motive of sanctifying industry and damning commerce.
I hope that it is not immodest in this debate to quote one sentence in an Adjournment debate which I had on 12th December 1972, which, I think, is completely relevant to our proceedings. On that occasion I said:
I have always believed that hotel buildings should be regarded as industrial buldings for tax purposes".—[Official Report, 12th December 1972; Vol. 848, c. 405.]
That point has been made by many of my hon. Friends over a period of years. I am bound to say that the Conservative Government were not much more receptive to it than the present Government, but the present Government have added to their lack of enthusiasm for service industries a positive discrimination against them, as well as hostility towards invisibles. That is a very serious charge to make against any Government, but I do not make it lightly.
I am bound to repeat to the Minister the proposition that I put to him when he opened the debate—namely, that one has the impression that he is seeeking to help manufacturing industry by kicking commerce and trade where it hurts most. I remind him of the current position that invisibles occupy in our balance of payments. For the first quarter of 1976 the current balance was minus £60 million while the invisible balance was plus £410 million. For April and May the projections for current balance in total were minus £133 million and minus £212 million while the projections for invisibles were plus £130 million and plus £130 million respectively.
If the hon. Gentleman studies the foreign currency earnings from travel and tourism, he will find that they play an important role. Whereas for 1975 we had a current balance deficit on net earnings of minus £1,702 million, the foreign currency earnings on travel and tourism showed a surplus of £273 million. The Minister will never achieve economic success if he seeks to promote the interests of manufacturing industry by damaging those industries—and they are not too many, I am sorry to say—where we have a success story on our hands.
The Minister has referred to the development of land which is in the use of organisations owning it. That is what we are discussing. I was horrified to listen to what the Minister said about an hotel which deliberately buys a piece of land and seeks to develop it in two or three phases. I should advise him that it is a common occurrence for hotels to provide themselves initially with facilities for 100 or 150 rooms with the intention of continuing development by adding another 100 or 150 rooms later. What the Minister said in answer to my intervention was a deterrent to those who are seeking to build, operate and develop their hotels.
My hon. Friend the Member for Hove put this matter politely. I shall put it more bluntly: the Government are job snobs. They believe that a job in coal mining is a plus job and that a job in an hotel as a receptionist is a minus job.
The company with which I am connected recently opened an hotel in Newcastle on Tyne, with the benefit of Government assistance as it is in a development area. If the Minister visited that hotel, he would find that many people had been employed at that hotel from the day that it opened. The hon. Gentleman will know that these people would have great difficulty in finding alternative employment in the North-East. I plead with him to do what he can to change his attitude—if it is not his attitude, it is certainly the attitude of most of his right hon. and hon. Friends—to jobs in service industries and to stop regarding them as being only half-jobs.
The need for a healthy tourist and hotel industry is directly related to the success or otherwise of our overall balance of payments position. The


Minister is seeking to remove the slight chink of light that had been shone upon the hotel industry by the amendment that was carried in Committee.
The Minister should be aware that the industry is suffering grievously from legislation passed not only by this Government, but by their predecessors. The Fire Precautions Act is hitting very hard, small hotels of the type referred to by my hon. Friend the Member for Hove. The health requirements and regulations are being used viciously and unscrupulously in a few places where the environmental health officers should not be looking whilst other more vulnerable places seem to be ignored. The industrial tribunals, in their activities following the Employment Protection Act, seem to be hammering at the service industries as well. Hotels have been particularly hard hit by massive rate increases. The process does not stop.
At one o'clock this morning we had a ridiculous Order placed before and passed by this House—the Government Whips were on—which insisted that restaurants could serve wine only in carafes in sizes that the Government stated were acceptable, and, if the sizes were not acceptable, the Government were not going to allow carafe wines to be sold. That was another ridiculous and wholly unnecessary Order.
My hon. Friend the Member for Hove referred to the absence from the debate of any Ministers from the sponsoring Department for tourism—the Department of Trade. In fairness to the Minister, I must say that is not a unique position. That was sometimes the situation under the Conservative Government. I hope that the hon. Gentleman will accept that I am not making a partisan comment.
The tourist industry is sick and tired of being treated not only as a Cinderella industry—ignored at every opportunity by Ministers who are supposed to be responsible for it—but of seeming to find itself the butt of all the nastiest and most pernicious legislation that the Government can bring forward. I suspect that this has a great deal to do with the lack of trade union muscle able to be mustered by those working in the hotel and catering industry.
My hon. Friend the Member for Hove touched on this matter. It is a sad fact

that by no means all of the 800,000 people who work in the hotels and catering industry, many of whom are self-employed, are members of the British Hotels Restaurants and Caterers Association. I hope that if and when the day comes that those people are properly represented, the Government will take more notice of their representations than they seem to be taking of points made by Conservative and other Opposition Members.
6.15 p.m.
The Treasury is at least consistent in the way in which it seeks to deny to hotels their legitimate rights as an industry employing people and providing jobs. I saw my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) enter the Chamber just now. I recall that when he was at the Treasury 20 Conservative Back-Benchers went to see him to extract a promise of assistance to the small hotels and boarding houses which were being severely affected by the Fire Precautions Act. Out of that was born the Fire Precautions (Loans) Act. The same industry will be adversely affected if the Minister succeeds tonight in removing the amendment that was carried in Committeee.
I should like to draw the attention of the House to another matter which shows that the hotel industry is not receiving parity of tax treatment with manufacturing industry and demonstrates that this country is very much the odd man out with the EEC. I asked the Chancellor of the Exchequer to list
for all nine EEC countries, whether or not the structure of an hotel is allowable for tax purposes, as a charge against depreciation; and what is the rate in each country.

The Minister replied giving the percentage rate of depreciation as follows:


"Belgium
…
Yes
3·0


Denmark
…
Yes
1·0


France
…
Yes
2·8


Germany
…
Yes
2·0


Ireland
…
Yes
10·0


Italy
…
Yes
3·5


Luxembourg
…
Yes
2·2


Netherlands
…
Yes
5·0


United Kingdom
…
No.



—[Official Report, 14th April 1976; Vol. 909, c. 609.]

That is only one of numerous examples that I could quote of the discrimination that is being suffered by the British hotel and catering industry. I certainly hope


that the Minister, even at this late hour, will recognise the importance of the industry to our economy and that it is in every way entitled to be given parity of treatment with manufacturing industry on the proposition that a job in an hotel is as important to the person doing it as is a job in a coal mine.

Mr. Norman Miscampbell: It is inevitable that in discussing the new clause the hotels industry and its problems will be canvassed. Before turning to the Minister's arguments, it is worth noticing that there are two quite different groups of hotels. There are those which obviously come to mind—the London hotels, the Stratford hotels and the great Scottish hotels in areas of tourist attraction—which earn a high proportion of foreign currency. Indeed, the occupancy of their rooms may be as much as 70 per cent. or 80 per cent. by people who pay in foreign currency. I should have thought that the argument for allowing the clause to include them was overwhelming.
The other group consists of hotels of the type to be found in the area represented by my hon. Friend the Member for Blackpool, South (Mr. Blaker) and myself. I think that between us we represent the greatest conglomeration of small to medium-sized hotels in the country, if not in the world. Although they earn a proportion of foreign currency, clearly, from the conferences which take place in Blackpool and the people who holiday there, it is not so obvious that they contribute so markedly to the national economy. Yet they do. The choice of whether to go to a hotel of the type found in my constituency or to a hotel on the Costa Brava is a fine point. The cost may be a little more to go abroad. But there is no doubt that the great tourist centres for English people contribute negatively by attracting people who take their holidays in England and do not spend foreign currency.
I now turn to the Minister's argument, which I first read in the report of the Committee's debate on clause 19. At that time I was struck by the oddity of the clause, just as I was struck with its oddity when it was again propounded this afternoon. The argument is perfectly tenable if the Minister seeks to impose a tax whose purpose purely and

simply is the raising of revenue. It is possible to say that there are some people who cannot bear the tax and that they must be exempted from it. If it is sought to impose a tax not simply to raise revenue but to extend Socialist doctrine, it is a strange argument to say "Having decided to do this, we shall exempt industry as it is too weak to bear the tax, but we shall not defer the tax for the others." It is not within the Minister's power to say "It is no disadvantage to the others. It is a disadvantage to my constituents. I do not wish to harp on parochial matters, but this proposal is clearly to the disadvantage of the town which I represent. This is an odd way of raising taxation.
I differ profoundly from the Minister's view of what has happened to commercial enterprise as distinct from industrial enterprise in the past 10 or 15 years. The experience of my constituency has not been that commercial enterprise has found the going easy. It may be true that, south of a line from Birmingham to the Wash, office and hotel development and new shops and precincts, have gone on apace. But as a generality nothing could be further from the truth north of that line.
Only one major new hotel has been built in Blackpool—and that is always teetering on the verge of going on or not. Only one major hotel has been built in Blackpool since the war. We had to give up the prospect of a comprehensive downtown development. There has been no noticeable increase in shopping or office facilities. However, such development as has occurred will be hit hardest by this Bill. There has been a revolution in that existing hotels have been developed. Hotel owners have built on the land already available to them by adding rooms and carrying out improvements. I use the word "revolution" deliberately. The town's hotel industry has changed immeasurably for the better over the past 15 years. Rooms and accommodation have been improved. The numbers of rooms have been increased. The facilities available have changed out of all recognition. However, it is just that kind of development, which has taken place on a considerable scale, that will attract the tax. As a result, damage will be done to the town and the industry.
I wonder why it is necessary to inhibit that kind of enterprise. We wonder how that will help our country or assist in building the kind of society which the Government say they wish to see in this country—a profitable and prosperous society in which people may have decent jobs.
It is not only hotels that we require. Perhaps the most crying need is for office development. Hon. Members representing other constituencies in the Fylde area are present. They will know that Blackpool and the Fylde area produce young people who are well trained, not necessarily in industrial skills, and who seek to follow in the steps of their fathers in office jobs, often in the great Civil Service Departments which are in Blackpool.

Mr. Denzil Davies: The hon. Member for Hove (Mr. Sainsbury) excluded offices from his clause, which is now Clause 19. The hon. and learned Gentleman obviously does not agree with his hon. Friend concerning office development.

Mr. Miscampbell: I appreciate that. The same argument and the same intervention took place in Committee.
As I understand it, we are dealing with all the group of amendments. I am making a general rather than specific point. I should not support anyone who sought to remove offices from the scope of the clause. This point has a validity and a general application that goes further than merely this debate. It applies to many areas, especially Fylde.
In the Fylde, a large number of young people are coming forward who would like to work in that area. They seek predominantly the kinds of office jobs which have always existed in that area. However, there is not the increase in commercial activity or office building that will provide those jobs. Young people are leaving school and are finding that unemployment runs into double figures in the area.
I hope that the clause will not be accepted and that we shall revert to the position which I hoped had been established by the Committee when it considered the matter a few weeks ago. That position was welcomed, correctly, by our local Press and industry in Blackpool.
I do not believe that the Minister has unguarded moments. He is frank and straightforward in dealing with these matters. He said that in considering the clause he could see that there were arguments on either side. I am glad of that. When he considers the matter clearly, I am sure he will feel that the imposition of this tax upon our productive wealth—it deals not with matters such as the pure development of land for housing but with industry and commerce—will do nothing to help our country or its economy.

Mr. Bowden: I was not a member of the Standing Committee. However, I read the report of the Committee's debate on Clause 19 and the amendments.
The House has great sympathy with the Minister, who is presenting his case without believing it to be the right one. I suspect that he struggled hard and long to persuade his colleagues that the amendments passed in Committee should be accepted but that tragically he lost. Therefore, he has the difficult task of persuading the House to reverse the decisions that were made in Committee.
As the debate on the clause proceeds, the weight of evidence for not accepting it, and for maintaining the present position in the Bill, becomes increasingly strong. We may see the weight gathering on the Minister's shoulders almost minute by minute as he sags lower and lower into his seat, reluctantly knowing that sooner or later he must yet again justify his case. I say this with great respect, because clearly he won the admiration of all members of the Committee for his straightforwardness. He is playing on a difficult wicket. I am sure that he would much rather be at Lords, even if there are only a few minutes to go before close of play, than have to reply to this debate in an hour or so's time.
I shall be unashamedly parochial in the context of the speeches made by some of my right hon. and hon. Friends who represent towns such as Blackpool and Bournemouth, all of which come within the top three or four, with Brighton and Hove top of the league.
6.30 p.m.
We in Brighton have in the last few years taken a number of major decisions involving the investment of a large


amount of ratepayers' money. We are in process of building a great conference centre in Brighton which will be visited by the vast majority of hon. Members in the next few years when the respective party conferences are held in Brighton.

Mr. Miscampbell: And in Blackpool.

Mr. Bowden: With great respect to my hon. and learned Friend the Member for Blackpool, North (Mr. Miscampbell), we shall be delighted to have a change from Blackpool because we feel that we should alternate between one or two of the major seaside towns.
That project will involve a large investment by the people of Brighton. The decision was taken with great courage by Brighton Corporation, because the total cost will be well in excess of £8 million. The conference centre will attract a large number of international conferences. Already the publicity officer of Brighton has been contacted by organisations in Canada, most of the European countries and even the United States of America which wish to hold conferences in the new building. It will earn for this country many millions of pounds of overseas currency in the years ahead. Therefore, it is absolutely tragic that the present Government should bring forward a Bill of this type, because it can only be detrimental to the efficiency and effectiveness of the tourist and catering industry throughout the country.
Brighton has been seeking to build up an off-season as well as an on-season industry. In the past, the area has often been forced to put people out of work during the off-season because there has not been a sufficient number of visitors in the town to justify keeping on catering and hotel workers in the town. The building of the conference centre will mean that conferences will be held in Brighton all the year round. It will provide employment and will minimise the effects of "on" and "off" seasons.
However, the Bill can only harm the developments that will be needed to run in conjunction with the new conference centre. The great new marina that is being built in Brighton will provide additional facilities that will benefit the hotel and catering industry. However, the Government, instead of encouraging the industry, are seeking to clobber it, and

their efforts will discourage the industry from expanding and providing new jobs. This can only have a pernicious effect on the future of the industry.
In the last 10 years the hotel and catering industry has suffered a large amount of additional legislation. Indeed, it has reached a point at which the burden is almost unreasonable. A director of a leading firm of caterers in Brighton—his organisation also covers Hove—recently wrote to me saying that he had to spend so much of his time in dealing with legislation that he found it difficult to cope with the problems of running his business. The fact that he is so bogged down by a mass of Government legislation, controls, restrictions and all the rest has meant that a disproportionate amount of his time is spent in dealing with that burden alone. That surely is a gross misuse of manpower.
It may be said "Why does not the company use professional advisers and experts to undertake that work?" Those services are extremely costly. There comes a time when the smaller companies cannot go on using the services of highly qualified and expensive professionals to deal with forms and the complex situation that faces business. This Bill is yet another step in that direction and will put yet another burden on industry.
It amazed me that the Minister, in presenting his case, appeared to act as though industry and commerce had nothing to do with each other—in other words, that it did not matter whether the Government were tougher on one because they were relieving the other. Surely the hon. Gentleman knows that the effective operation of our economy depends on industry and commerce running together as two effective efficient units rather than on division. There must be a partnership in which one industry actively supports and encourages the other. One cannot penalise one without affecting the other.

Mr. Adley: Does my hon. Friend feel that if Mr. Jack Jones were chairman of the British Hotels Restaurants and Caterers Association the story might be different?

Mr. Bowden: I do not know whether Mr. Jack Jones could be persuaded to advise the association. My hon. Friend


the Member for Christchurch and Lymington (Mr. Adley), who is on the executive committee of that association body in an unpaid position, might be in a position to offer Mr. Jack Jones such a job, but I shall leave him to raise the matter at the association's next meeting.
In recent months there has been a great cry from the Labour Benches about the lack of investment by industry, but for years the Labour Government and their supporters have been placing burdens on industry and bleeding it white. This has resulted in a situation in which industry has been unable to make sufficient profits and, therefore, has not been able to achieve the amount of investment in new equipment, buildings and development that it would wish. Labour Members cannot have it both ways. They cannot take money out of industry and commerce through taxation and at the same time stalk the country demanding more and more investment.
Even at this late hour in terms of the Bill, I ask the Minister to think again and to withdraw the clause. If he does, he will do a great service to the hotel and catering industry.

Mr. Walter Clegg: I wish to support the argument advanced by my hon. Friend the Member for Brighton, Kemptown (Mr. Bowden) and especially the case put forward by my hon. and learned Friend the Member for Blackpool, North (Mr. Miscampbell), many of whose arguments apply to Fleetwood and Cleveleys.
I wish to look at this matter in the context of the unemployment figures published today. I refer especially to the unemployment among school leavers. In the Fylde, as in other areas around our coasts, many of the school leavers are looking forward to working in the service industries, which are basic industries on which we all depend. Near my constituency is a famous technical college that trains people for catering and hotel work. Graduates from that college will be looking for jobs in the near future.
The Minister said that there was a difference between manufacturing industry and commerce. That is a difficult distinction to understand. I believe that the two are linked because one is the customer of the other. We must face the situation that we now have over 1 million

unemployed workers and the largest number of unemployed school leavers ever in this country. The new clause proposed by the Government will put yet another obstacle in the way of commerce and of the hotel and tourist industries.
The Minister's arguments are totally false. If obstacles are put in the way of the development of the service industries, custom will be removed from the manufacturing industries. Hotel expansion involves the construction industry, which is going through hard times, the steel, potteries and many other industries.

Mr. Michael Latham: Is my hon. Friend aware that in an answer today the Government said that 206,000 construction workers were unemployed compared with 113,000 in March 1974? The figure has almost doubled.

Mr. Clegg: That makes my point. The inhibition of development in the service industries will lead to more unemployment, not less.
There is a good case for exempting the service industries, because they are inseparable and would give a boost to industry generally. We are told that we need a surge in manufacturing industry but how can that be created if the orders are not there? The expansion of hotels and commercial buildings of all kinds would provide an incentive for investment in industry.
Fleetwood, in my constituency, has experienced the trauma of the Icelandic dispute and people are being laid off. There is little land left on which to develop manufacturing industry. In the rest of the constituency there are large green-belt areas containing little land for the development of manufacturing industry. But there are areas on the coast and inland where the service industries such as hotels and restaurants could be developed. If they are to be inhibited, my constituency will suffer in a particular way. Several of my hon. Friends wish to speak, so I shall not argue the case further. But what I least understand about the Government proposal is that it will increase unemployment. After today's figures, the Government have every reason to withdraw the clause.

Mr. Michael Spicer: I want to look briefly at the Minister's argument in defence of his indefensible position.


Some of his asides led me to suppose that he also thinks that his position is indefensible. The Minister based his argument on the assumption that there are two sectors or identities in society. He assumed that in the economy there is something called the industrial sector, which is good because it is bad and not doing well and, therefore, should receive the support of a regime which supports bad things, usually with public money or through nationalisation.

Mr. Sainsbury: Is that not the support of lame ducks?

6.45 p.m.

Mr. Spicer: That is what it is all about.
We apparently have a sector called industry which is to be treated in a special way. We also have another sector or identity called commerce which, because it is good, is bad, and because it is doing well is something to be discriminated against. I do not want to spend too long on that argument but I want to look carefully at whether one might hypothesise that those two sectors, as my hon. Friend the Member for Brighton, Kemp-town (Mr. Bowden) indicated, are more interlinked than would be supposed from this discriminatory legislation.
My hon. Friend the Member for Hove (Mr. Sainsbury) has already considered the possibility that far from thriving, commerce—in the retail trade, for instance—might be doing badly. It could be argued that a fundamental reason for the most depressed areas being depressed is precisely that they have a poor services sector.
I am familiar with the North-East because I fought there as a candidate over 10 years. I would argue that the reason the North-East is depressed and that business will not invest is that of the poor services sector. In most parts of the region there is poor provision of hotels, shops and other services. A link exists between the poverty of the services and the commercial aspects of the region—which the Minister believes to be thriving and, therefore, not to be helped—and the manufacturing industry which is depressed. Services are crucial and are totally missed in the premise which, apparently, underlies the Bill.
I support my hon. Friend the Member for Hove in saying that it is not true that the commercial services sector is particularly thriving. It may be thriving in London to some extent, but it is not in the rest of the country. We depend on the total balance of goods and services in those areas which are a particular problem and about which the Government are correctly concerned. They determine the poor performance which the Minister has said exists in industry. In those areas commerce and the service sectors are not doing well. Because of that manufacturing industries in those areas lack that investment which we all try to encourage. A major reason why people do not invest in the North-East, why management is difficult to attract, and why brighter people, having been educated there, leave is that the qualitative and commercial side of life is lacking.
The argument that there is a distinction between those two sectors and that the commercial sector is thriving is fallacious. Since that is the argument on which this particularly absurd piece of legislation is based we have to reject it and ask the Minister to produce something better.

Mr. Nick Budgen: I wish to declare two interests. First, I have an interest as one who owns a small amount of land which either has or may attract planning permission. Secondly, I declare interest as a barrister, although I do not specialise in this area of law. Ironically, my profession will be amongst those sections of the community that most benefit from the legislation, which is both oppressive and complex.
The balance of argument today and in Committee has been, on this side of the House, not only in terms of those who have spoken but because we have won the argument against the Minister, who lacks no eloquence or intellectual ability. He knows, as we do, that his position is nonsensical. All of us on this side of the House have acquired a great deal of respect, admiration and affection for him. The sad thing is that his position is typical of that of the social democrats in the Labour Party in that he is prepared to go along with proposals that he knows to be nonsense.
The proposal before us is to distort the economy in favour of manufacturing


industry. I have nothing against manufacturing industry. Many of my constituents are directly engaged in it, and my family has been engaged in it for generations. My proposition is advanced on the basis not that there is anything good or bad about manufacturing industry but that it is wrong for the State to attempt to distort the economy in favour of any one section. Here we see the traditional prejudice of the Labour Party in favour of manufacturing industry to the detriment of all other sectors of the economy.
Even the most intelligent and farsighted politician or economist can never predict how the economy will more over the next two years, and certainly not over the next decade or two. Who would have thought 20 years ago that today we should have our own supply of North Sea gas and oil—

Mr. Stephen Ross: Who would have thought that Wolves would be in the Second Division?

Mr. Budgen: Indeed. Perhaps even the Labour Party of 20 years ago recognised that the City of London was already contributing a great deal by invisible earnings to meeting the problem we then had, with fixed exchange rates, of trying to run a surplus on our balance of payments.
Why have the present Government, like all previous Labour Governments, an extraordinary fixation with manufacturing industry? We hear so often about the boredom and the repetitious work on the assembly line at British Leyland, for instance. We hear how people become so fed up that they organise some form of trade union activity. If I were working on the assembly lines of British Leyland I should be bored, and I should be even more Bolshy than I am here. If I had the privilege of being elected, I should be a trade union leader and should do my best to disrupt the work as the only way to try to relieve the tedium.
It is not enough for the Government to say that the citizens of today are to be locked into that way of life. The Government want to lock those citizens' children and grandchildren into manufacturing industry. They want to fossilise and distort the economy so that that way of life can continue for ever. Is it what

the people want? Why are we increasingly educating more and more people in various forms of higher education, in a way which rightly gives them expectations of a more varied and exciting way of life, and yet telling them "You cannot go into commerce or the hotel industry. We shall distort the economy so that you must go into manufacturing industry and continue in a way of life which your father has rightly regarded as less attractive than the new ways of life which a free economy would evolve for you."?
Let us look at the extraordinary attitude of the intellectuals of the Labour Party. They are for ever talking about the need to give more and more aid to the Third World countries, yet at the same time they propose import controls and distortions of the economy in favour of domestic manufacturing industry. They do not seem to realise that, as any advanced country proceeds, the wages in it are bound to be relatively higher than in the developing countries. As a result, the advantage will tend to flow towards the developing countries, as they turn to manufacturing industry and in some instances inevitably undercut the manufacturing industry of the developed and advanced country.
We are told that we must distort our economy to lock our citizens into a form of employment which many of them have demonstrated by their own activities they do not enjoy and do not wish to continue. This proposal is as good an example as any we have seen, even by comparision with SET, for example.
The result of the proposal will be that when a firm, such as commercial distributors, wishes to take over premises being used inefficiently by manufacturing industry, in respect of which there is a deferred liability to DLT, it will say "We can't take them over because if we do there will be a triggering of liability to DLT." We shall see yet another way in which the profitable and expanding use of resources is distorted by Government intervention.
It is all part of the wider problem that people are being prevented from living as they wish. There is nothing more democratic, nothing fairer, than the market response to the millions and millions of preferences of free people. When those free people express a preference


for some form of commercial activity, they give that preferred commercial activity the profits to buy space and take people into employment. The Government are distorting those preferences by saying "You cannot take over manufacturing industry. We shall stick an extra tax on premises which were previously used by manufacturing industry, so that to take them over you will have to pay a whacking great lot of tax." In that way, the Government express their preferences over those of the consumer and the ordinary citizen.
My hon. Friends have asked why it is being done. I suppose that partly it is the heavy price we are all paying for the unique and extraordinary relationship between the Government and the trade union movement. Even the most cursory analysis of the trade union movement reveals that, although it directly represents only half the work force, it tends to represent that part which is engaged in manufacturing industry. Therefore, it is believed that to distort the economy in favour of manufacturing industry will enable the Government to ingratiate themselves with their lords and masters in the trade union movement.
7.0 p.m.
My hon. Friend the Member for Christchurch and Lymington (Mr. Adley) suggested that the proposal was motivated by job snobbery. I wish that it were, because snobbery is a trivial and stupid enough emotion. I suggest that it is something worse than that. This proposal is motivated by the desire of a Labour Administration to go in for a bit of social and political engineering, because, just as they believe and hope that if they keep people in council houses they will tend to vote Labour, so they believe that if they keep people in manufacturing industry they will also vote Labour. The Government believe that if a man is taken out of a factory and put into an office or warehouse, he may change his attitude and, as those in the Labour Party would say, betray ordinary working people. So we are continuing to pay the price for retaining this present Government in power. We are paying it in loss of job opportunities for the future, in loss of profit and in further distortion of our economy.
Finally, may I take up a point made by my hon. Friend the Member for Hove (Mr. Sainsbury) on the danger of large liabilities for tax being deferred and held over the heads of companies. Today, unhappily, we see more and more interference by Government in all forms of commercial activity. We see it not only in a general way but also, do we not, in the most detailed way, for instance in the Price Code? One of the dangers of having these deferred liabilities for tax is that a Government of any complexion when they are trying to lean upon a particular industry, or even a particular firm, may threaten it with triggering off liability for tax, a liability which individual firms and individual industries may know they have absolutely no chance of paying off.
When one thinks, for instance, of the machinations that are centring on the Price Code at the present time, which will no doubt continue to be a part of our way of life until we break out of that extraordinary arrangement, is there not a real danger that future Governments may say to individual industries "If you do not agree to our particular ideas about the Price Code, we give you due warning that we will trigger off the liability for taxation under DLT."? If we believe in freedom, we are giving to this Government and to successive Governments a very dangerous weapon when we allow them to hold above the heads of many of our great industries this postponed liability to DLT.

Mr. Nicholas Ridley: My hon. Friends have well deployed the case that there is here severe discrimination in favour of manufacturing industry and against commercial activities of a different nature. It has always been a part of the Labour Party prejudice that unless one wears a boiler suit one is not an ordinary working person. I must say I admire the eloquence of my hon. Friend the Member for Worcestershire, South (Mr. Spicer) and my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) and I shall not seek to explore too deeply the ground which they so ably opened up, except to say that this really is shades of SET. Lord Kaldor walks again. I have always wondered why a Hungarian should share this particular dislike of modern activity and wish to stick in the past, but there is


one flaw which always gets people into trouble when they seek to persecute more modern activities than hitting pieces of iron with a hammer.
There is something called the co-operative movement which cannot by any stretch of the imagination be classified as an industrial activity. So just as with SET we find with this Bill that the co-operative movement is singled out for excessive taxation just because it is not a manufacturing industry. In Committee, if I understand it right, some hon. Gentlemen who have an interest in the co-operative movement found it expedient to be absent from the Committee Room when a vote was taken on this point. I congratulate them. I even suspect that one of them may be in the Chamber now, but I do not know. I would not wish to drag out of any hon. Gentleman interests which he has not declared in a standing position; but if that be so, surely they would be right to do so now, because discrimination in all its forms is odious.
The point I wish to explore is: what is manufacturing industry? How do we define which are sheep and which are goats? It was the same point which gave rise to endless discussion on SET. If I remember rightly there was something called "standard industrial classification" which gave glorious meat to the Opposition and which, understand ably, has not been produced again on this occasion; but there is something very nearly as good. That is Schedule 4 paragraph 7, Class E (a), which is referred to in the new clause, under which those activities regarded as industrial purposes of any trade are defined as:
(a) the carrying on of any process for or incidental to any of the following purposes, namely—
(i) the making of any article or of any part of any article, or the production of any substance;"—
such as candyfloss—
(ii) the altering, repairing, ornamenting, finishing, cleaning, washing, freezing, packing or canning, or adapting for sale, of breaking up or demolishing of any article".
I want to tell my hon. and learned Friend the Member for Blackpool, North (Mr. Miscampbell) and my hon. Friends the Members for Blackpool, South (Mr. Blaker) and Brighton, Kemptown (Mr Bowden), who complained that the con-

ference industry is outwith the scope of this relief that demolition of any article can take place at a party conference without any DLT at all, so they can get out of it in that way.
What of "washing any article"? I happen to have a kitchen where three weary times a day my housekeeper washes up dishes, so she is regularly washing articles in my house. Does that let me off? I should have thought probably it did, but I am reminded of the story of a Lord Wimborne of one or two successions ago who had a house adjacent to the Ritz Hotel in Piccadilly. One day the Ritz Hotel wrote to him saying "We are considering extending our hotel. If you ever thought of selling your house we should be most grateful if you would let us know so that we can put in the first offer". That Lord Wimborne wrote back saying "Thank you very much for your kind letter. I am not thinking of selling my house at present, but I am thinking of extending it. If you are ever thinking of selling your hotel I should be grateful if you would let me know because I should like to put in the first bid." Here, of course, such transactions would be hit by DLT. The Ritz Hotel is regularly cleaning, washing and freezing. What else do they do in the laundries and kitchens of that hotel? They are continually cleaning, washing and freezing—

Mr. Michael Spicer: And breaking up things.

Mr. Ridley: My hon. Friend anticipates my words. I am sure that that Lord Wimborne, too, was continually breaking articles, so one has only to have someone breaking up old champagne bottles to be breaking up articles as in trade.
So what is the definition of "industry"? There is no definition of "industry". There is no rigid distinction between those who engage in a meaningful activity in the community and those who do not. For example, those who are engaged in computer programming are not allowed to defer development land tax if they extend their computer programming premises. Consultants, the City of London, banking and insurance, all bogy men to Government supporters—if only there were a few of them present—are the people who are earning our living. They are the people who have been slightly alleviating the enormous imports


of industrial machinery by their invisible exports. So, says the Minister, they are the ones who can take the clobbering, and it is industry which must be allowed to go scot free.
What is the yield of the relief that we are giving to industry by this new clause, and what would it be if we gave the relief to commerce, too? I do not know, but I think that those questions should be answered, because I suspect that the cost of extending this relief to commerce is just a small amount of money, and probably much less than the cost of giving it to industry. Before we make the prejudicial discrimination based on that ancient prejudice of the Labour Party for no other reason than doctrinaire hate, as advised by Lord Kaldor, we should know what it would cost.
I have news for the Minister, because the matter can be taken forward. I go back to the new clause and I quote from subsection 1(b):
the deemed disposal, relates to a building or other land to be used, in whole or in part, for the industrial purposes of that trade".
What does "in part" mean? It does not say "as to half", or "as to a quarter". It just says "in part". So, all that Lord Wimborne has to do is to have one man engaged in trade somewhere beyond the green baize door. It could be a lady knitting sweaters, or someone making pottery, quietly stuffed away. Lord Wimborne would say "Oh, yes. My house is used in part for purposes connected with the trade of pottery", and he gets through.
There is no possibility of determining which part of which enterprise is engaged in trade and which part is engaged in industry. There is no way that we can discriminate without throwing up all these problems of demarcation, the extent to which it is industrial and the extent to which it is commercial.
Then there are the difficult questions of large companies which have part commercial and part industrial activities. This piece of discrimination will give rise to endless confusion, doubt, litigation and so on.
I see the point which the Government make, of course, that to impose any further burden on industry might be a mistake, especially when it is one which

in a sense is gratuitous and not connected to a company's activities as a manufacturer. If it is fortunate in getting a big gain on the development of some site it should be relieved of paying tax on that. I think that we can accept that point of view, but if it is true of industry, that this is not a proper subject for taxation, how much more true is it of commerce, and, if it is true of commerce—hotels, banking, insurance and so on—how much more true is it of anyone else?
By this new clause the Government have said to the world at large "Our tax is so bad, so pointless, so arbitrary and so discriminating that we cannot allow it to apply in cases where we think that it matters", the supposition being that in no other case does it matter, but the evidence is that this is a bad Bill introducing a bad tax, and the fact that the Government seek to exempt industry will give away the story that the Government do not have confidence in their own tax.
Let the Government heed what has been said by my hon. Friends who represent areas of tourism, hotels, and many of the other activities which are alleged to be commercial and not industrial. Let them for once do something about it. Let them accept the amendments at least extending the relief to commerce. Because the way that the Government go on legislating their prejudices and hates is what is driving this country under—this discrimination, and this desire to make come true, in the form of legislation, all the ancient dogma, of the bad industrial periods long before the Government's present supporters were born, which they have had handed down to them by their fathers and grandfathers, and which is now legend. It is too late to start legislating these prejudices. It would be better if they came into the real world and realised that it is not just manufacturing industry which earns this country a living but many diverse activities which do not involve overalls but which keep large numbers of British manufacturing industries going by the contributions which they make to the balance of payments and to the nation's revenues.

7.15 p.m.

Mr. Michael Latham: After the heady wine and brilliance of the oratory of my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), the House


must now return to the dull cloudy sediment of mine, because I want to ask a number of detailed questions of the Minister and to do so simply because we are in the last detailed stage of the Bill.
There is no discussion of the Bill in the House of Lords. This is a taxing Bill. We have to get it right now, and we have to get it right tonight because the Government have introduced a clause now which was not discussed in Committee. The detailed job which should have been done in Committee cannot be done now, and certainly it cannot be done in the House of Lords. For that reason, I have some questions to put to the Minister before I go on to make one or two general observations.
The first matter that occurs to me on reading the clause is its remarkable similarity to Clause 19 as it was previously drafted. Reading through the very few changes in New Clause 1 from the wording in Clause 19, the dark theory in my mind is that perhaps the Government thought that they had better discuss the clause earlier on and try to reverse the Committee's amendment when they had some of their troops around rather than in the watches of the night when the House came to consider the amendments put forward to Clause 19. If that is not the intention, there is no reason why the Government should have wasted the paper required to print New Clause 1 when 95 per cent. of it is identical to wording currently in the Bill.
I come now to one or two points on the new clause. I am not allowed, of course, to refer to amendments which are not selected, but I can refer to the words of the clause. Looking at line 22 of the clause, I see that there are new words there:
or for or incidental to the generation of electricity".
These are additions to the list currently contained in page 107 of the Bill under Class E, to which my hon. Friend the Member for Cirencester and Tewkesbury referred so amusingly.
I do not need to read that list, because my hon. Friend went through most of it, but I cannot understand why, suddenly, the generation of electricity has been put into the Bill. It has nothing to do with the remainder of the clause or with the list under Class E. Why include elec-

tricity? Why not gas, coal or nuclear power? There is a great energy conference taking place today. Why have we discriminated in this clause in favour of one form of energy without listing all the others? What is the reason why those words have been inserted although they were not in the previous clause? The Minister made no attempt to explain that.
Next, looking at lines 51 and 52 we see the words "any trade at all". They replace the previous words in the Bill, which were "that trade". What is the reason for that change? "That trade" was quite specific and what it meant was clear. The phrase "any trade at all" is a very wide, catch-all phrase. There must be some reason why the draftsmen have changed those words. What was it? Perhaps the Minister will be able to get guidance from his officials—although I do not know how he will physically be able to do so as I notice that his Parliamentary Private Secretary has left the Chamber. Perhaps these messages come by telepathy.
In line 84 we have a new qualification, the addition of "(a)". As previously drafted, the clause talked about "subsection (7) above". Now it is related solely to "subsection (7)(a) above". What is the purpose of that restriction? In the original clause we see that certain things were specified in subsection (7) which will now apparently no longer be the case for the purpose of subsection (7)(a) here. Why has that restriction been made?
When new clauses are brought forward on Report, given that there is no detailed consideration in the House of Lords, we must get matters on record and get them right. That is what Parliament is here for. We shall expect an explanation from the Minister on these detailed points.
I turn from the particular to the slightly more general. I want to express my serious concern about the fact that the Minister made no attempt to carry out the undertakings—semi-undertakings, I concede—that he gave to the Standing Committee on 11th May. I want to quote in full what he said so that the House may see it fairly. He said:
Perhaps I could say something about the Opposition amendment which was carried last week. Since the Committee decided in that way, we are looking again, hut without prejudice, at the arguments put. We are looking at them with an open mind to see whether


it is possible to give some expression to the will of the Committee. But I want to make it quite clear that it is not a commitment: we have not changed our mind. However, in all fairness to the Committee, since it decided in the way it did, we should look at the argument again."—[Official Report, Standing Committee J, 11th May 1976; c. 1046–47.]
Having given that undertaking and having, presumably, looked at the matter again, the Minister came to the conclusion that he should not actually make any change, so I cannot see how he looked at it "with an open mind". The Committee had made a particular decision and had particularly changed the wording. At that stage the Minister could have said "I disagree with the decisions of the Committee. When the Bill goes to the Floor of the House, I shall ask my right hon. and hon. Friends to try to restore the original position." We should not have liked it, but the Minister could have done that. He did not do that. He raised our hopes. He said that he would look at it with an open mind, but he then reconsidered the matter and has come forward with the same clause. He says "What does it matter? That is what the House is for—to decide these things."
It matters, however, to people outside the House, who are saying "The Minister raised our hopes and we made all sorts of decisions as a result of his hint, but now he comes forward with the same clause." To do this makes an absolute farce of the semi-undertaking that he gave.
Anyone who has studied the Committee's proceedings carefully will feel that the Minister has not done anything to help us in regard to his undertakings. When he was considering the amendment moved in Committee by my hon. Friend the Member for Hove (Mr. Sainsbury), he took exception to its wording because he said that the word "commercial"—which is the purpose of our Amendment (a)—was not sufficiently specific and clear to enable him to accept it in its form. He said that the word "commercial"
has no meaning so far as I am aware, in any fiscal legislation.
That is all very well, but if the Minister took the view that the wording was imprecise he should not have given the impression, which he did, that the word-

ing was what he was quarrelling with rather than the principle. He said:
If the hon. Gentleman is now saying that he wants the exclusion of retail shops and hotels, that is another argument, and I suggest It would be another amendment. We are being asked to incorporate an amendment to add 'commercial'. I think I am making a fair point.
The Minister went on to say,
One could not possibly argue on the one hand that 'trade' is too wide and 'commercial' is not."—[Official Report, Standing Committee J, 6th May 1976; c. 1034–5.]
Again, therefore, at that point the Committee was given reason to believe that the Minister was dissatisfied with the wording of the original amendment but was not wholly out of sympathy with its spirit. It is all the more disappointing, therefore, that we have the same wording as before.
Finally, I want to express some degree of concern about the way in which we have to proceed on these very technical Government new clauses. As I have said, this is a taxing Bill and, therefore, the other place has no part in the matter. It cannot amend the Bill, so we must get the Bill right here. If Ministers are to bring forward major new clauses of this type and those which are to follow, which must be discussed in the House on Report, they should give far more notice than they have on this occasion so that those directly concerned with these matters are able to let hon. Members, on both sides of the House, have their full comments. What we are doing cannot be said in any way to be a satisfactory procedure, because we are changing irrevocably in this Session the law of the land and we are introducing a major new tax. No one listening to our deliberations, despite the great efforts being made on all sides in relation to this matter, could say that these proceedings were basically satisfactory as regards putting legislation on the statute book.

Mr. Stephen Ross: I am delighted to follow the speech of the hon. Member for Melton (Mr. Latham). He was good enough to say some kind things about me on Second Reading. Hon. Members on both sides of the House recognise his knowledge of the subject. He has certainly put some very sound points to the Minister. We look forward to hearing the answers.
I shall not speak for long. I wanted to hear the arguments about the new clause. I did not serve on the Committee. To begin with, I felt that the Government had something on their side in that they were giving whatever relaxation there was to be to industry. I think that everyone must agree that it is to the industrial side and to our exports that we must give assistance. On the retailing side, and certainly in the distributive trade and hotel industry, there has been a great deal of activity in recent years. Even the hon. Member for Hove (Mr. Sainsbury) would have to accept that. There have been varied developments and new ideas over the last few years.
Nevertheless, a case has been made. I think that my grandmother, long since dead, would find it amusing. She was a great Tory, if ever there was one. When my father told her that he was going into trade, she was horrified. Yet speaker after speaker on this side has spoken in defence of commerce, such is the change in 50 years.
Many hon. Members have spoken on behalf of holiday areas. My constituency, the Isle of Wight, is certainly such an area. Unemployment figures on the island are down from nearly 9 per cent. in January to 5·4 per cent., according to figures issued today. I welcome that drop. I am delighted about it, but I know the real reason for it. That is the tourist industry. It is the holiday season which has taken up a lot of the slack.
In the island some advantage was taken of the grants made available to hotels by the previous Labour Government, but they were nothing like enough. A great deal more will have to be done if we are to continue to attract tourists to the island. Therefore, it is of great importance to the hotel and the tourist industry generally that it should not be dissuaded from moving forward and from carrying out the necessary improvements which must be made.
I should declare an interest. I live next door to an empty pub in the centre of Newport. I understand that the brewery is about to reopen it and convert it into a small hotel. I was supporting the licensing legislation the other day, but I am not so sure I should have done, for if the pub is to be reopened juke boxes may be put in and music may well go on

till midnight. If the new clause is not amended, I shall be in great difficulty, because if I want to sell my house to the brewery, it will have to pay the tax immediately and will not be able to defer it. So the likelihood is that it will not buy.
Warehousing connected with industry is excluded, but general warehousing should also get this deferment.
I feel that the Government ought to reconsider their position because I think that the argument which has been put from this side of the House, despite a great deal of the flourish which has gone with it, does come from a sound base. I would hope that the Government, even at this late hour, will relent, and agree that the new clause should include commerce as stated in the main amendment.

7.30 p.m.

Mr. Nicholas Fairbairn: I do not know whether language has any meaning, but if it does the commitment which the Minister gave in Committee was that the Government would look again at our proposals with an open mind. It is quite clear from the proposition in the new clause that they looked again at our propositions with a closed mind.
In the definition clause there is no definition of "industrial purposes". As I understand it, that is the purpose of the new clause—that we should discover what industry is all about. I do not know how the Government intend to limit their new clause to "industrial purposes", but it is simple to look up the meaning of the word "industry". It means:
… diligence or habitual employment in useful work".
I should have thought that there were very few people employed in any activity who could not be said—so long as they are employed—to be habitually employed in useful work. During the debate in Committee we constantly asked the Government what the reason was for making this distinction and why it was necessary to restrict the preference to industrial activity.
I represent a constituency in which there is almost total employment but almost no industrial activity. I represent a constituency in which it is very likely, since it has a large area of land, that


there will be constant dealings and transactions which will be caught by this tax. I have to ask myself upon what possible basis the Government think it right, wise, or principled, to exclude every person whom I represent from these generous provisions.
The argument, so far as I recall, that the Minister used in Committee was that if we started making definitions and categories, it became too difficult for all of us to draw the distinction between factories on the one hand and commercial developments on the other. He went on to say:
I make these points again, in all sincerity, merely to show the difficulty once one gets away from the tight industrial manufacturing classification."—[Official Report, Standing Committee J, 6th May 1976; c. 1036.]
I do not know what the Minister meant by "tight industrial classification". What is it? It is so tight that there is no activity which one cannot say may or may not fall within it. Let us look at the tightness of the industrial classification. If a person sells cups, he is not within the tightness of the industrial classification, but if he puts a little painting on the cup before he sells it, he comes within the tightness of the industrial classification.
If a person receives white heather in his shop and sells it, that is not an industrial classification, but if he puts a nice piece of ribbon on it and the words "A Wee Present Frae Bonnie Scotland", presumably it comes within the tightness of the industrial classification.
The whole proposition is humbug and bogus. There is no end to the obvious exceptions and distinctions and qualifications that one could make. So tight indeed is "tight industrial classification" that it requires a clause of 1,750 words in order to make the Government's tight purposes clear.

Mr. Denzil Davies: I hate to interrupt the hon. and learned Gentleman in the full flow of his oratory, but Schedule 4(7) sets out fairly coarsely the classification that we have in mind when we talk about industrial purposes.

Mr. Fairbairn: I appreciate that in Schedule 4(7) there is an attempt to describe what is called "a tight industrial classification" but that will not do. The classes of purposes mentioned are:

Use as a dwelling-house or for the purpose of any activities which are wholly or mainly carried on otherwise than for profit, except use for a purpose falling within Class B, C or E:
That does not strike me as being tight, clear, or all that simple. To whom does it apply? Does it apply to any of the industrial activities, or manufacturing activities, or activities in which something is changed into something else? The:
Use as an office or retail shop:
is excluded. So is the:
Use as a hotel, boarding house or guesthouse, or as premises licensed for the sale of intoxicating liquors for consumption on the premises:
I am glad that at least the Labour Party understands that drinking is not an industrial activity. So is the:
'Use for the purpose of any activities wholly or mainly carried on for profit except—
(a) use as a dwelling-house or for the purposes of agriculture or forestry:
Why is it that all these activities are looked upon as anti-social? Why should forestry and agriculture be exempted from a Government who talk of "Food from your own resources"?

Mr. Budgen: They tend to vote Tory.

Mr. Fairbairn: Yes, indeed. It is only the activities of which the trade unions may have a grasping control which are allowed to have an exemption. I can find no other category or classification. The Minister is a distinguished lawyer and I look forward to his telling us of the tightness of his category of industrial activity.

Mr. Sainsbury: Perhaps my hon. and learned Friend will cast his eyes a little further down and consider what might be done with his white heather under Class E(a)(ii) which states:
the altering, repairing, ornamenting, finishing cleaning, washing, freezing, packing or canning, or adapting for sale, or breaking up or demolishing of any article;

Mr. Fairbairn: Of course, as my hon. Friend the Member for Hove (Mr. Sainsbury) will appreciate, this is a constant activity in Scotland. Needless to say, there are no members of the Scottish National Party present, because there is no industrial activity in Scotland,


apparently, and they are not interested. We are constantly
altering, repairing, ornamenting, finishing cleaning, washing, freezing, packing or canning, or adapting for sale, or breaking up or demolishing
white heather. It is one of the main interests in Scotland. It would be marvellous for that activity to be exempted, particularly the breaking up of white heather. I invite the Minister to come to my constituency and break up white heather. It is one of the most rewarding and creative industrial activities there is.
When their own legislation is stuck back down their throats and they pretend that this is a tight definition, the Government are naked in the face of their own hypocrisy. They did not look at it again with an open mind. They did not look at it with any mind at all. They just said to themselves "We are against commerce. We do not like people to indulge in commercial activity. We do not like self-employed people. We do not like small businesses. We like big organised industry. We will give them the preferences, and the exemptions, and we will ensure that those who earn their living, and most of the living for this country, are those against whom the distinction is made."
If the Minister can tell me tonight one single basis upon which this asinine and long distinction which he uses to describe the word "tight" other than doctrinaire prejudice, I shall be delighted to hear it. I shall be delighted to hear from his lips as counsel the opinion that I should write of what is an industrial activity. I shall be delighted if he can tell me how it can be so tightly drawn in a clause that requires 1,750 words to specify it and in a schedule that gives as disparate a group of activities as altering, repairing, ornamenting, finishing, cleaning, washing, freezing, packing, canning, adapting for sale, breaking up and demolishing.
There is no ejusdem generis about that clause. The Government have decided to exclude commerce. They have never liked any of the activities of those who engage in commerce, although they have always relied on the profits made by those people to indulge in their own various schemes. Their pretence tonight that there is any principle behind New Clause 1 is one

of the major hypocrisies to which the House has had the misfortune to listen.

Mr. Graham Page: My hon. Friends have deployed fully and effectively the arguments against the discrimination shown in the new clause in favour of industrial activity and against commercial activity. I am grateful for the support of the hon. Member for the Isle of Wight (Mr. Ross), but it is surprising that there has been no word from the Government Benches about the new clause, not even in justification of it, other than from the Minister himself. I cannot think that hon. Members who are sponsored by the co-operative movement can be happy about the discrimination against retail shops shown by the clause. They do not come here to support those who sponsor them.
Although the debate has been deployed on general principles of discrimination between industry and commerce, I should like to come down to the narrow point of the clause itself. From the point of view of development land tax arising out of a deemed disposal, there can be no distinction between industrial and commercial undertakings. We are not dealing with a gain from selling or disposing of a property. This is one of the fictitious gains in the Bill—the ficitious gain of developing property, what we have come to understand from Clause 2 as "deemed disposal".
Under this new clause we are dealing not even with a deemed disposal, which is a development of property for the purpose of disposing of it eventually, but with a development of property for use by an industrial concern—we would include commercial concern—already operating. It is not a question which bears upon the speculative developer.
The Minister said that if the clause were extended to commence, we should be discriminating against the speculative developer. There is a distinction between the person who develops on his own land to extend his own business and improve his service to the public, and the speculative developer who is not building custom-built property but wishes to make his profit on the disposal of the property.
Therefore, the benefit being given here to industry is not really a benefit at all. It is a relief from tax which those con-


cerned might otherwise, under this disastrous Bill, be called upon to pay for having the enterprise to develop their own premises and businesses. What distinction can there be between the industrialist who develops his own premises and extends his business and the commercial man who does the same?
The Minister made the distinction by saying "We want to help industry because of the appalling state of manufacturing industry." That was an exaggeration. He then compared that state with the thriving state of commercial development. Does he realise that there has been practically no office development in the last three years? He is thinking of the time some years ago when there was a boom in that type of property development.
7.45 p.m.
There is no real distinction between the industrialist and the owner of the retail shop. In each case we are talking about a man who owns a concern already, who is developing and extending his own property and business—a man, for example, who moves into a new and expanding estate in the suburbs and starts up a corner shop but has enough foresight to know that that estate will develop and he will in due course be able to turn his business into a supermarket. This tax will prevent him from making that development.
I want to direct the Minister's attention to the particular case of the wholesale warehouse, whether it is treated as a business on its own or as part of the industrial premises. The effect of Amendment (c) which would leave out the words "paragraph (a) of", is to include the whole of Class E on page 107 as an industrial process. It would include warehouses for industrial premises.
If an industry extends its premises by building warehouses, as the Bill stands it will be called upon to pay the tax immediately on a deemed disposal. The amendment would bring into the relief the warehouses of the industrialist who extended his premises to build a warehouse. Beyond that, however, is there really any distinction between the factory and the warehouse, even when it is not connected with any particular factory? The wholesale warehouse serves a useful purpose for industry. In fact, industry

could not do without it. If it is expanded, however, it will not get relief in the payment of this tax.
The case for hotels and restaurants has been effectively argued today, and I support everything that my hon. Friends have said about the damage this will do to hoteliers who wish to extend their premises and give greater services to their clientele. Although the enterprising people in commerce of this sort will be deterred by this tax, there has, strangely, crept into the new clause a reference to the generation of electricity. That is an industry which will get the relief of not having to pay the tax at once if it develops its own property. How that crept in, I do not know. Why electricity? Why not gas or hydraulic power? I should be only too happy to extend this relief further. Why stop at electricity?
The other amendments deal with the addition of the word "commercial". Amendment (g) deals with premises which have been expanded and which then suffer destruction, for example by fire, and the owner receives the insurance. In the normal way that would be an actual disposal. He would be receiving money for disposal, albeit a disastrous disposal, of his property. Obviously, in this case the fact that he has been relieved from the tax should not trigger off a liability. In other words, if an industry has expanded its premises which are subsequently burned down, and up to that stage the tax has been deferred, the tax liability should not be triggered off and the deferment ended simply because the owner received insurance money. I do not see why the Minister should not accept our Amendment (g).

Mr. Sainsbury: This is another case on which the Minister in Committee undertook to look at the matter. I assume that he looked at it, and he should be in a position now to say something definitive about it.

Mr. Page: Yes, that is so. We had an assurance that the Minister would look at this. I think it was an assurance which was given with some confidence that we were on to a correct point.
There is a little complication about the voting on the new clause, because the Minister has done it in a rather peculiar way. He is putting in an existing clause


as a new clause. This leaves us in difficulty. If he intends to relieve people—in this case industry—from the tax, we are in favour of that, but, of course, we would rather have Clause 19 as it appears in the Bill at the moment. If I ask my hon. Friends to divide, it is not because we do not like the relief that is being given to industry. It is because we prefer Clause 19 as it is, because it gives greater relief. I do not want there to be any misunderstanding about that. I assume that when we reach Amendment (a), which would add commerce to the new clause, we may have a Division on it.
We feel that the new clause does not carry out the undertaking that we hoped the Minister was giving in Committee. Neither has he put forward any new arguments for refusing the amendment to the clause that we won in Committee.

Mr. Denzil Davies: We have had another very full debate. We had thought that the Opposition would welcome discussing the new clause at this stage because at least that enables the debate to take place in the hours of daylight. But the real reason it has been introduced now is purely procedural. If we had arrived at Clause 19 there would have been consequential drafting amendments and there would have been difficulty about putting down those amendments. I assure hon. Members that there is no device or ploy here. It is unfortunate, but there is no other procedural way of going about it.
I accept entirely what the right hon. Member for Crosby (Mr. Page) said about voting on New Clause 1. I accept that he and his colleagues would not be voting against relief for industry, because voting in that way is part of the procedural way of getting rid of Clause 19. The Government want to vote on Amendment (a) as well.

Mr. Graham Page: On consideration of the Minister's answer, I think it would be sufficient to divide just on Amendment (a) and save a lot of time.

Mr. Davies: Yes, I accept that, beccause it is Amendment (a) which is substantive.
The hon. Member for Hove (Mr. Sainsbury) asked about the differences in the new clause from the original Clause 19. Apart from restoring the restriction

of relief to industry, the new clause contains other changes made in Clause 19 in Committee. These include the provision that sale and lease back transactions should not trigger off the deferred tax. They also meet an undertaking given in Committee that the deferred tax would not be triggered off if the owner of an industrial property wished to use that property for a different trade.
They also provide for the development of the generation of electricity to qualify for relief. This remedies an anomaly by which the development of other energies is exempt from tax because the processes in use fall into Class E. At the moment electricity generation does not fall into this category. This change brings electricity into line with other fuels.
The hon. Member for Melton (Mr. Latham) discussed subsection (a), which is slightly different from the corresponding provision in Clause 19. This is purely drafting. It refers back to subsection (7)(a) and not to subsection (7), because subsection (7)(a) describes the disposal. This drafting change does not alter the substance in any way.
I thought that the hon. Member for Melton was rather nit-picking, but I think that hon. Members recognise that I made a clear statement in Committee that I was not giving a commitment to reverse what the Committee decided. I said that the Government would look at it with an open mind. This we have done, and just because we have come to a different conclusion from that which the hon. Member would have liked does not mean that we did not look at it in good faith.
As far as Amendment (a) is concerned, "commerce" is not a term which means much in fiscal legislation. If the House accepted the amendment, we should have to look at the word "commerce" and perhaps change it to "trade".
I have been asked why this new clause was put down so late. Hon. Members have complained that no one could make representations because of this lateness. But most people would not order their affairs on the basis of something that happened in Committee before the Report stage of a Bill. I informed hon. Gentlemen some time ago that we should be seeking to reverse Clause 19. I did so


by this rather strange procedural way of a new clause.
The hon. Member for Kinross and West Perthshire (Mr. Fairbairn) invited me to write his opinions. I would if I could have his fee. The wording goes back to town and country planning legislation, and is also contained in the development gains legislation for which his party was responsible.

8.0 p.m.

Mr. Fairbairn: Will the Minister confirm that in subsection (2)(b) of the new clause the wording is used otherwise and that
a dwelling-house, for the welfare of workers employed in such a trade
could cover a miners' welfare institute?

Mr. Davies: I expect that it would, but the phrase "industrial purposes" is well known in planning and fiscal legislation.

Mr. Graham Page: Since the Minister has not mentioned Amendments (c) and (g), I presume that he is prepared to accept them.

Mr. Davies: I am not prepared to accept Amendment (c), which deals with warehouses. Of course, if they are warehouses within the curtilage of industrial premises, they would be covered, but if they are not within it, they would not be. To draw a distinction between "industrial" and "commercial" and then to bring in warehouses would present difficulties, because it would be impossible to maintain the distinction.
Amendment (g) deals with the situation where compensation or insurance moneys are received for the destruction of a property. The amendment argues that that should not rank as a part disposal. The hon. Member for Hove said that I gave an undertaking to the Committee on this point. I undertook not to bring forward an amendment but merely to look at the matter.
The Bill already contains sufficient protection. The receipt of insurance moneys ranks as a part disposal, but the amount of tax triggered is determined by the board or, on appeal, the commissioners who decide what is just and reasonable. The commissioners therefore decide how much tax should be

triggered, and in most cases they would say that it was not reasonable for there to be any triggering of liability.

Mr. Adley: May I take up the point about what is just and reasonable? Will the Minister say something for future reference for inspectors who are faced with the problem? Is it just and reasonable for a hotelier who built a hotel two years ago intending to develop it over 10 years, and in five years' time provides kitchen development, to find that the development does not qualify for relief even though it was in the original plan?

Mr. Davies: I am not sure whether the hon. Member is directing his mind to the amendment. I think that he is going further. The general or special commissioners will decide what is just and reasonable. If during the operation of the tax it appears that hardship is created, I give the assurance that we shall look at the matter to see whether we can provide for that situation. Nevertheless, I should have thought that the common sense of the commissioners would be a sufficient safeguard.
I return to my general argument. In principle there is no case for a deferment, no case for a distinction between industrial and commercial. But, because of the poor state of industrial development and because commercial development has been thriving, we do not want anyone to suggest that we might have impeded industrial development by our proposals. They do not do that, but we cannot take any risk with manufacturing industry, and that is the reason for the deferment.
I accept that there is a gulf between the two sides about the importance that should be attached to a distinction between industry and commerce, or perhaps between the provision of goods and services. I know that my arguments will not commend themselves to the Opposition, but I urge my hon. Friends to support the clause.

Mr. Sainsbury: On a point of order, Mr. Deputy Speaker. Are we to have a debate on Amendments (a) to (f) and Amendments Nos. 56 to 61? We have not discussed these amendments. The arguments were directed to the first group on the selection list.

Mr. Deputy Speaker (Mr. Bryan Godman Irvine): The hon. Member must have been out of the Chamber when Mr. Speaker explained this matter. I was under the impression that he had announced that with the first group of amendments there would also be taken the second and third groups. They have therefore been debated.

Mr. Sainsbury: It was my impression that Mr. Speaker said that it was in order to refer to the points covered by the second group, but not that we were actually debating them.

Mr. Deputy Speaker: Mr. Speaker indicated to me when I took the Chair from him that those amendments were being debated.

Mr. Sainsbury: I was the first Back Bencher to speak in this debate and what Mr. Speaker said was said after I had spoken. I have therefore not had the opportunity to make the remarks I wanted to make on Amendment (c).

Question put and agreed to.

Clause read a Second time.

Amendment proposed: (a) in line 7, after "industrial", insert "or commercial".—[Mr. Graham Page.]

Question put, That the amendment be made:—

The House divided: Ayes 269, Noes 285.

Division No. 190.]
AYES
8.10 p.m.


Adley, Robert
du Cann, Rt Hon Edward
Hordern, Peter


Aitken, Jonathan
Dunlop, John
Howe, Rt Hon Sir Geoffrey


Alison, Michael
Durant, Tony
Howell, David (Guildford)


Arnold, Tom
Edwards, Nicholas (Pembroke)
Howell, Ralph (North Norfolk)


Atkins, Rt Hon H. (Spelthorne)
Elliott, Sir William
Howells, Geraint (Cardigan)


Awdry, Daniel
Emery, Peter
Hunt, David (Wirral)


Baker, Kenneth
Evans, Gwynfor (Carmarthen)
Hunt, John


Banks, Robert
Eyre, Reginald
Hutchison, Michael Clark


Bell, Ronald
Fairbairn, Nicholas
Irving, Charles (Cheltenham)


Bennett, Dr Reginald (Fareham)
Fairgrieve, Russell
James, David


Berry, Hon Anthony
Fart, John
Jenkin, Rt Hon P. (Wanst'd &amp; W'df'd)


Biffen, John
Fell, Anthony
Jessel, Toby


Biggs-Davison, John
Fisher, Sir Nigel
Johnson Smith, G. (E Grinstead)


Blaker, Peter
Fletcher, Alex (Edinburgh N)
Jones, Arthur (Daventry)


Body, Richard
Fletcher-Cooke, Charles
Jopling, Michael


Boscawen, Hon Robert
Fookes, Miss Janet
Joseph, Rt Hon Sir Keith


Bottomley, Peter
Forman, Nigel
Kaberry, Sir Donald


Bowden, A. (Brighton, Kemptown)
Fowler, Norman (Sutton C'f'd)
Kershaw, Anthony


Boyson, Dr Rhodes (Brent)
Fox, Marcus
Kimball, Marcus


Bradford, Rev Robert
Fraser, Rt Hon H. (Stafford &amp; St)
King, Evelyn (South Dorset)


Braine, Sir Bernard
Fry, Peter
King, Tom (Bridgwater)


Brittan, Leon
Galbraith, Hon. T. G. D.
Kitson, Sir Timothy


Brocklebank-Fowler, C.
Gardiner, George (Reigate)
Knight, Mrs Jill


Brotherton, Michael
Gardner, Edward (S Fylde)
Knox, David


Brown, Sir Edward (Bath)
Gilmour, Rt Hon Ian (Chesham)
Lamont, Norman


Bryan, Sir Paul
Gilmour, Sir John (East Fife)
Lane, David


Buchanan-Smith, Alick
Glyn, Dr Alan
Langford-Holt, Sir John


Buck, Antony
Godber, Rt Hon Joseph
Latham, Michael (Melton)


Budgen, Nick
Goodhart, Philip
Lawrence, Ivan


Bulmer, Esmond
Goodhew, Victor
Lawson, Nigel


Burden, F. A.
Goodlad, Alastair
Le Merchant, Spencer


Butler, Adam (Bosworth)
Gorst, John
Lloyd, Ian


Carlisle, Mark
Gow, Ian (Eastbourne)
Luce, Richard


Chalker, Mrs Lynda
Gower, Sir Raymond (Barry)
McAdden, Sir Stephen


Channon, Paul
Grant, Anthony (Harrow C)
MacCormick, Iain


Churchill, W. S.
Gray, Hamish
McCrindle, Robert


Clark, Alan (Plymouth, Sutton)
Grieve, Percy
Macfarlane, Neil


Clark, William (Croydon S)
Griffiths, Eldon
MacGregor, John


Clarke, Kenneth (Rushcliffe)
Grist, Ian
Macmillan, Rt Hon M. (Farnham)


Clegg, Walter
Grylls, Michael
McNair-Wilson, M. (Newbury)


Cockcroft, John
Hall, Sir John
McNair-Wilson, P. (New Forest)


Cooke, Robert (Bristol W)
Hall-Davis, A. G. F.
Madel, David


Cope, John
Hamilton, Michael (Salisbury)
Marshall, Michael (Arundal)


Cordle, John H.
Hampson, Dr Keith
Marten, Neil


Cormack, Patrick
Hannam, John
Mates, Michael


Corrie, John
Harvie Anderson, Rt Hon Miss
Mather, Carol


Crawford, Douglas
Havers, Sir Michael
Mawby, Ray


Critchley, Julian
Hawkins, Paul
Maxwell-Hyslop, Robin


Crouch, David
Hayhoe, Barney
Mayhew, Patrick


Crowder, F. P.
Henderson, Douglas
Meyer, Sir Anthony


Davies, Rt Hon J. (Knutsford)
Heseltine, Michael
Miller, Hal (Bromsgrove)


Dean, Paul (N Somerset)
Hicks, Robert
Mills, Peter


Dodsworth, Geoffrey
Higgins, Terence L.
Miscampbell, Norman


Douglas-Hamilton, Lord James
Holland, Philip
Mitchell, David (Basingstoke)


Drayson, Burnaby
Hooson, Emlyn
Moate, Roger




Monro, Hector
Renton, Tim (Mid-Sussex)
Stewart, Ian (Hitchin)


Montgomery, Fergus
Rhys Williams, Sir Brandon
Stokes, John


Moore, John (Croydon C)
Ridley, Hon Nicholas
Stradling Thomas, J.


More, Jasper (Ludlow)
Ridsdale, Julian
Tapsell, Peter


Morgan, Geraint
Rifkind, Malcolm
Taylor, R. (Croydon NW)


Morgan-Giles, Rear-Admiral
Rippon, Rt. Hon Geoffrey
Taylor, Teddy (Cathcart)


Morris, Michael (Northampton S)
Roberts, Michael (Cardiff NW)
Tebbit, Norman


Morrison, Hon Peter (Chester)
Roberts, Wyn (Conway)
Temple-Morris, Peter


Mudd, David
Rodgers, Sir John (Sevenoaks)
Thomas, Rt Hon P. (Hendon S)


Neave, Airey
Ross, Stephen (Isle of Wight)
Thompson, George


Nelson, Anthony
Rossi, Hugh (Hornsey)
Townsend, Cyril D.


Neubert, Michael
Rost, Peter (SE Derbyshire)
Trotter, Neville


Newton, Tony
Royle, Sir Anthony
Tugendhat, Christopher


Normanton, Tom
Sainsbury, Tim
van Straubenzee, W. R.


Nott, John
St. John-Stevas, Norman
Vaughan, Dr Gerard


Onslow, Cranley
Scott, Nicholas
Viggers, Peter


Oppenheim, Mrs Sally
Shaw, Giles (Pudsey)
Wakeham, John


Page, John (Harrow West)
Shelton, William (Streatham)
Walder, David (Clitheroe)


Page, Rt Hon R. Graham (Crosby)
Shepherd, Colin
Walker, Rt Hon P. (Worcester)


Parkinson, Cecil
Shersby, Michael
Wall, Patrick


Pattie, Geoffrey
Silvester, Fred
Walters, Dennis


Penhaligon, David
Sims, Roger
Warren, Kenneth


Percival, Ian
Sinclair, Sir George
Watt, Hamish


Peyton, Rt Hon John
Skeet, T. H. H.
Weatherill, Bernard


Pink, R. Bonner
Smith, Cyril (Rochdale)
Wells, John


Powell, Rt Hon J. Enoch
Smith, Dudley (Warwick)
Welsh, Andrew


Price, David (Eastleigh)
Speed, Keith
Whitelaw, Rt Hon William


Prior, Rt Hon James
Spence, John
Wiggin, Jerry


Pym, Rt Hon Francis
Spicer, Jim (W Dorset)
Winterton, Nicholas


Raison, Timothy
Spicer, Michael (S Worcester)
Wood, Rt Hon Richard


Rathbone, Tim
Sproat, Iain
Young, Sir G. (Ealing, Acton)


Rawlinson, Rt Hon Sir Peter
Stainton, Keith
Younger, Hon George


Rees, Peter (Dover &amp; Deal)
Stanbrook, Ivor



Rees-Davies, W. R.
Stanley, John
TELLERS FOR THE AYES:


Reid, George
Steen, Anthony (Wavertree)
Mr. W. Benyon and


Renton, Rt Hon Sir D. (Hunts)
Stewart, Donald (Western Isles)
Mr. Jim Lester.




NOES


Abse, Leo
Concannon, J. D.
Garrett, John (Norwich S)


Allaun, Frank
Cook, Robin F. (Edin C)
Garrett, W. E. (Wallsend)


Anderson, Donald
Corbett, Robin
George, Bruce


Archer, Peter
Cox, Thomas (Tooting)
Gilbert, Dr John


Armstrong, Ernest
Craigen, J. M. (Maryhill)
Ginsburg, David


Ashley, Jack
Cryer, Bob
Golding, John


Ashton, Joe
Cunningham, G. (Islington S)
Gould, Bryan


Atkins, Ronald (Preston N)
Cunningham, Dr J. (Whiteh)
Gourlay, Harry


Atkinson, Norman
Dalyell, Tam
Grant, George (Morpeth)


Bagier, Gordon A. T.
Davidson, Arthur
Grant, John (Islington C)


Barnett, Guy (Greenwich)
Davies, Bryan (Enfield N)
Grocott, Bruce


Barnett, Rt Hon Joel (Heywood)
Davies, Denzil (Llanelli)
Hamilton, James (Bothwell)


Bates, Alf
Davies, Ifor (Gower)
Hardy, Peter


Bean, R. E.
Davis, Clinton (Hackney C)
Harper, Joseph


Benn, Rt Hon Anthony Wedgwood
Deakins, Eric
Harrison, Walter (Wakefield)


Bennett, Andrew (Stockport N)
Dean, Joseph (Leeds West)
Hart, Rt Hon Judith


Bidwell, Sydney
de Freitas, Rt Hon Sir Geoffrey
Hattersley, Rt Hon Roy


Bishop, E. S.
Dell, Rt Hon Edmund
Hatton, Frank


Blenkinsop, Arthur
Dempsey, James
Hayman, Mrs Helene


Boardman, H.
Doig, Peter
Heffer, Eric S.


Booth, Rt Hon Albert
Dormand, J. D.
Hooley, Frank


Boothroyd, Miss Betty
Douglas-Mann, Bruce
Horam, John


Bottomley, Rt Hon Arthur
Duffy, A. E. P.
Howell, Rt Hon Denis


Boyden, James (Bish Auck)
Dunn, James A.
Hoyle, Doug (Nelson)


Bradley, Tom
Dunnett, Jack
Huckfield, Les


Bray, Dr Jeremy
Dunwoody, Mrs Gwyneth
Hughes, Mark (Durham)


Brown, Hugh D. (Provan)
Eadie, Alex
Hughes, Robert (Aberdeen N)


Brown, Robert C. (Newcastle W)
Edge, Geoff
Hughes, Roy (Newport)


Brown, Ronald (Hackney S)
Edwards, Robert (Wolv SE)
Hunter, Adam


Buchan, Norman
Ellis, John (Brigg &amp; Scun)
Irvine, Rt Hon Sir A. (Edge Hill)


Buchanan, Richard
Ellis, Tom (Wrexham)
Irving, Rt Hon S. (Dartford)


Butler, Mrs Joyce (Wood Green)
English, Michael
Jackson, Colin (Brighouse)


Callaghan, Jim (Middleton &amp; P)
Ennals, David
Jackson, Miss Margaret (Lincoln)


Campbell, Ian
Evans, Fred (Caerphilly)
Janner, Greville


Canavan, Dennis
Evans, Ioan (Aberdare)
Jay, Rt Hon Douglas


Cant, R. B.
Ewing, Harry (Stirling)
Jeger, Mrs Lena


Carmichael, Neil
Fernyhough, Rt Hon E.
Jenkins, Hugh (Putney)


Carter, Ray
Fitt, Gerard (Belfast W)
John, Brynmor


Carter-Jones, Lewis
Flannery, Martin
Johnson, James (Hull West)


Cartwright, John
Fletcher, Raymond (Ilkeston)
Johnson, Walter (Derby S)


Castle, Rt Hon Barbara
Fletcher, Ted (Darlington)
Jones, Barry (East Flint)


Clemitson, Ivor
Ford, Ben
Jones, Dan (Burnley)


Cocks, Michael (Bristol S)
Forrester, John
Judd, Frank


Cohen, Stanley
Fowler, Gerald (The Wrekin)
Kaufman, Gerald


Coleman, Donald
Fraser, John (Lambeth, N'w'd)
Kelley, Richard


Colquhoun, Ms Maureen
Freeson, Reginald
Kerr, Russell







Kilroy-Silk, Robert
Mulley, Rt Hon Frederick
Smith, John (N Lanarkshire)


Kinnock, Neil
Murray, Rt Hon Ronald King
Snape, Peter


Lambie, David
Newens, Stanley
Spearing, Nigel


Lamborn, Harry
Noble, Mike
Stallard, A. W.


Lamond, James
Oakes, Gordon
Stewart, Rt Hon M. (Fulham)


Latham, Arthur (Paddington)
Ogden, Eric
Stoddart, David


Leadbitter, Ted
O'Halloran, Michael
Strang, Gavin


Lee, John
Orbach, Maurice
Strauss, Rt Hon G, R.


Lestor, Miss Joan (Eton &amp; Slough)
Orme, Rt Hon Stanley
Summerskill, Hon Dr Shirley


Lever, Rt Hon Harold
Ovenden, John
Swain, Thomas


Lewis, Arthur (Newham N)
Owen, Dr David
Thomas, Jeffrey (Abertillery)


Lewis, Ron (Carlisle)
Padley, Walter
Thomas, Mike (Newcastle E)


Lipton, Marcus
Palmer, Arthur
Thomas, Ron (Bristol NW)


Litterick, Tom
Park, George
Thorne, Stan (Preston South)


Lomas, Kenneth
Parker, John
Tierney, Sydney


Loyden, Eddie
Parry, Robert
Tomlinson, John


Luard, Evan
Pavitt, Laurie
Tomney, Frank


Lyons, Edward (Bradford W)
Peart, Rt Hon Fred
Torney, Tom


Mabon, Dr J. Dickson
Pendry, Tom
Tuck, Raphael


McCartney, Hugh
Perry, Ernest
Urwin, T. W.


McElhone, Frank
Phipps, Dr Colin
Varley, Rt Hon Eric G.


MacFarquhar, Roderick
Prentice, Rt Hon Reg
Wainwright, Edwin (Dearne V)


McGuire, Michael (Ince)
Price, C. (Lewisham W)
Walden, Brian (B'ham, L'dyw'd)


Mackenzie, Gregor
Price, William (Rugby)
Walker, Harold (Doncaster)


Mackintosh, John P.
Radice Giles
Walker, Terry (Kingswood)


Maclennan, Robert
Rees Rt Hon Merlyn (Leeds S)
Ward, Michael


McMillan, Tom (Glasgow C)
Richardson, Miss Jo
Watkins, David


McNamara, Kevin
Roberts, Albert (Normanton)
Watkinson, John


Madden, Max
Roberts, Gwilym (Cannock)
Weetch, Ken


Magee, Bryan
Robertson, John (Paisley)
Weitzman, David


Mahon, Simon
Robinson, Geoffrey
Wellbeloved, James


Mallalieu, J. P. W
Roderick, Caerwyn
White, Frank R. (Bury)


Marks, Kenneth
Rodgers, George (Chorley)
White, James (Pollok)


Marquand, David
Rodgers, William (Stockton)
Whitehead, Phillip


Marshall, Dr Edmund (Goole)
Rooker, J. W.
Whitlock, William




Willey, Rt Hon Frederick


Marshall, Jim (Leicester S)
Ross, Rt. Hon W. (Kilmarnock)
Williams, Alan (Swansea W)


Mason, Rt Hon Roy
Rowlands, Ted
Williams, Alan Lee (Hornch'ch)


Maynard, Miss Joan
Sandelson, Neville
Williams, Rt Hon Shirley (Hertford)


Meacher, Michael
Sedgemore, Brian
Williams, Sir Thomas


Mellish, Rt Hon Robert
Selby, Harry
Wilson, Alexander (Hamilton)


Mendelson, John
Shaw, Arnold (Ilford South)
Wilson, William (Coventry SE)


Mikardo, Ian
Sheldon, Robert (Ashton-u-Lyne)
Wise, Mrs Audrey


Millan, Bruce
Shore, Rt Hon Peter
Woodall, Alec


Miller, Mrs Millie (Ilford N)
Short, Rt Hon E. (Newcastle C)
Woof, Robert


Mitchell, R. C. (Soton, Itchen)
Silkin, Rt Hon John (Deptford)
Wrigglesworth, Ian


Moonman, Eric
Silkin, Rt Hon S. C. (Dulwich)
Young, David (Bolton E)


Morris, Alfred (Wythenshawe)
Sillars, James



Morris, Charles R. (Openshaw)
Silverman, Julius
TELLERS FOR THE NOES:


Morris, Rt Hon J.(Aberavon)
Skinner, Dennis
Mr. Ted Graham and


Moyle, Roland
Small, William
Mr. James Tinn.

Question accordingly negatived.

Clause added to the Bill.

New Clause 2

PRIVATE DISPOSAL PRIOR TO MATERIAL DISPOSAL AND AFTER EITHER NOTICE OF INTENTION TO ACQUIRE OR GRANT OF SUSPENDED PLANNING PERMISSION

'(1) This section applies where, on a material disposal, a body (in this section referred to as "the acquiring authority") acquire an interest in any land (in this subsection referred to as "the acquired land") and within the period of five years ending on the date of the material disposal,—

(a) an indication was given, as mentioned in subsection (3) below, of an intention to take into public ownership land which is or includes the whole or any part of the acquired land; or
(b) planning permission was granted with respect to land which is or includes the whole or any part of the acquired land and that permission was suspended under section

21 of the Community Land Act 1975 (suspension of planning permission for development which, at the time of the permission, is designated under section 18 of that Act);
and in the following provisions of this section so much of the acquired land as is land to which that indication or planning permission relates is referred to as "the designated land".

(2) If on a disposal (in this section referred to as "the private disposal") occurring after the giving of the indication or grant of the planning permission referred to in paragraph (a) or paragraph (b) of subsection (1) above but before the date of the material disposal the chargeable person has become liable for an amount of development land tax (in this section referred to as "the previous tax") and the private disposal—

(a) was a disposal of an interest in the designated land or any part of it (with or without other land), and
(b) was neither a deemed disposal nor a material disposal,
the acquiring authority shall be entitled in accordance with subsections (5) and (6) below to receive an amount (in this section referred to as "the relevant amount") in respect of the previous tax.

(3) For the purposes of this section, any indication of an intention to take any land into public ownership is given when—

(a) a compulsory purchase order is made authorising the acquisition of that land by the acquiring authority or by another body on behalf of the acquiring authority; or
(b) a notice stating that the acquiring authority intend to acquire that land is served under paragraph 4 or paragraph 5 of Schedule 7 to the Community Land Act 1975 (notices relating to land affected by planning permission to which section 19 or section 20 of that Act applies); or
(c) a counter-notice stating that the acquiring authority propose to purchase that land is served under section 23(7) of the Community Land Act 1975 (disposal notification areas: response to a notice of a proposal to dispose of a material interest);
but if, in a case falling within paragraph (b) above, the acquiring authority have, before the date of the material disposal, served notice under paragraph 6 of Schedule 7 to the Community Land Act that they have decided not to acquire any land, they shall be presumed for the purposes of this section never to have given an indication of their intention to take that land into public ownership.

(4) In any case where—

(a) the interest which was acquired on the private disposal does not extend beyond the designated land, and
(b) on the material disposal the acquiring authority acquire the interest referred to in paragraph (a) above or an interest of which that interest is a part for the purposes of Part I of Schedule 2 to this Act,
the relevant amount shall be equal to the whole of the previous tax; and in any other case the relevant amount shall be equal to such proportion (which may be the whole) of the previous tax as appears to the Board to be just and reasonable.

(5) If, immediately before the material disposal referred to in subsection (1) above, any part of the previous tax remains to be paid then, up to the relevant amount, any amount paid after that disposal in respect of that tax shall be payable by the Board to the acquiring authority; and subsection (7) of section 39 above shall apply to any amount payable by the Board by virtue of this subsection as it applies to any amount payable by them by virtue of subsection (6) of that section.

(6) In any case where—

(a) at the time of the material disposal the whole of the previous tax has been paid, or
(b) the relevant amount exceeds the part of the previous tax which, immediately before the material disposal referred to in subsection (1) above, remains to be paid,
the Board shall pay to the acquiring authority a sum equal to the relevant amount or, as the case may require, to the excess; and any sum required to be paid by the Board by virtue of this subsection shall be charged on and issued out of the Consolidated Fund.

(7) The reference in subsection (2)(b) above to the development land tax for which a person became liable on the private disposal includes a reference to any interest payable on that tax under section 86A of the Taxes Management Act 1970.

(8) In this section "material disposal" has the same meaning as in section 39 above.

(9) In the application of this section to Northern Ireland—

(a) subsection (1) above shall have effect with the omission of paragraph (b); and
(b) in subsection (3), for paragraphs (a) to (c) and the concluding words there shall be substituted the words "in pursuance of any enactment there is published either a notice of an application for a vesting order relating to that land or a notice of intention to make such an order".—[Mr. Denzil Davies.]

Brought up, and read the First time.

Mr. Denzil Davies: I beg to move, That the clause be read a Second Time.
This clause was touched upon earlier during the debate on the Money Resolution. I explained that its purpose was to cover the case in which a local authority had given notice of intention to acquire land, as set out in subsection (3) of the new clause, and the owner then sold to a private individual, with the result that when the local authority bought from the purchaser there would be no benefit to it because there would be a high base value and no development land tax could be deducted.
There might be a few such forestalling cases. We do not think there will be many. It is an artificial situation. Under the new clause, the Inland Revenue will be able to reimburse the local authority the tax which would have been payable if it had bought from the original owner. The Money Resolution will enable the Inland Revenue to pay money to local authorities rather than into the Consolidated Fund. This will not operate where there has been no conditional contract to sell the land.
Subsection (3) sets out the various conditions of intention which have to be fulfilled before local authorities can benefit from the new clause. Those conditions are the making of a compulsory purchase order, the issue of a notice of intended acquisition under the Community Land Act 1975, or the service of a counter-notice under the Act.
If an authority intends to purchase land after the owner has given notice of


intention to dispose of a material interest in the land in a disposal notification area, it will be fairly closely circumscribed. It is not merely a question of a council indicating in an off-hand way that it intends to buy land. There have to be definite indications as set out in subsection 3. If that happens and the owner sells before there is a conditional contract, the new clause will operate and tax will be payable to the Revenue.
This will apply to only the very few transactions where there is an attempt to prevent local authorities getting tax which they would otherwise have received.

Mr. Graham Page: This new clause did not appear on the Order Paper until a very late stage, and there will be no further opportunity to get it right. We have had very little time to consider it since it first appeared on Friday or Monday. It is constitutionally very important because it introduces the concept of alotting certain taxes for certain purposes. We seem to be going back to the 1920s and the road tax. There are strong objections to this principle.
We know what is intended on the apportionment of development land tax between local authorities and the Exchequer, but here we have local authorities and the Board of Inland Revenue jumping the gun on the division of taxes between the Exchequer and local authorities. If a transaction takes place directly between the owner of land and an exempted body, that body can estimate the current use value of the land and from that it can apply a formula and refrain from paying to the vendor the full purchase price by pocketing a certain sum for itself.
We object to the principle of allocating revenue for a particular purpose without the Board of Inland Revenue going to the Exchequer for it and instead of the Exchequer allotting money as the Government see fit to assist local authorities.
The procedure under Clause 39 of the Bill, together with the administrative action outlined in Schedule 7, results in the tax being deducted from the purchase money when a local authority or other exempted body purchases a property and is called upon to pay the purchase price. The tax will then be based upon the

development value, which is the difference between the cost of buying the land originally and the consideration for the sale.
If the sale to the local authority takes place shortly after the land has been purchased by the vendor, there will be little development in value upon which the tax can be assessed. In those circumstances, it has been thought—I guess at the last moment—that the local authority might be deprived of pocketing the development tax and might have to share the general pool of tax collected by the Exchequer. Frankly, I do not see why not in those circumstances.
8.30 p.m.
If we apply the proposals in New Clause 2, we get to such a complicated state of calculation that it is not worthwhile. I think that the Minister indicated in the debate on the Money Resolution that there would not be many cases of this sort. Is it worth while to undergo all the complications of the new clause so as to pick up a little bit of tax to hand over to the exempt body—the local authority or one of the other public bodies listed in Clause 12?
The complications of the new clause are frightening. If an owner of land sells his land to a private person—in other words, if there is an ordinary conveyance between vendor and purchaser—and the property is subject to some indication from a local authority, or other exempt body, that it wishes to buy the land, and the indication has been made as long ago as five years before, any tax paid by the vendor based on the development value at the time of that sale and purchase will be handed over to the local authority by the Board of Inland Revenue.
It is necessary to study the clause to see what is meant by an indication within the past five years of an intention by a local authority or other public body to acquire the property. If a compulsory purchase order is made in relation to the property, the authority will have given an indication that it intends or wishes to acquire the property. I presume that it is a compulsory purchase order which has or has not been confirmed. It may merely have been made by the local authority and not confirmed by the Secretary of State at the time of the sale and purchase between the private individuals.
There are two other indications which relate especially to the Community Land Act. The notice stating that the acquiring authority intends to acquire—as specified in Schedule 7 to the Community Land Act—and the counter-notice under the disposal notification arise from a procedure under the Act to which, I recollect, my right hon. and hon. Friends objected strongly when they were considering that measure.
I am sure that the Minister will have noted the misprint in subsection (3)(c) as printed, where reference was made to a
counter-notice station that the acquiring authority propose to purchase".
Obviously it should be a counter-notice "stating". I know that a number of my amendments contain misprints, but the misprint to which I have drawn attention shows, I believe, the haste with which the new clause was put on the Notice Paper and the lack of opportunity that my hon. Friends have had to study it carefully. We managed to put down a few starred amendments, but because they were starred they were not selected. To have to study a clause which, at a late stage, brings in an entirely new procedure based on an entirely new principle is unfair not only to the Opposition but to those who have to put the procedure into practice.
I appreciate what the Minister said in the debate on the Money Resolution—namely, that this procedure will not affect transactions between private individuals and that it will affect only claims by local authorities or other exempt bodies to payment of the tax from the Board of Inland Revenue. Nevertheless, local authorities and their officials will have to consider the application of the clause. It may be that, without an opportunity for us to have expert advice from outside, errors will occur in the clause and will cause great trouble. It is not for nothing that we normally have the procedure of Second Reading, Standing Committee. Report and Third Reading in both Houses when dealing with technical matters of this kind. We have that procedure to try to get our legislation right and not to have to resort to litigation to understand what it means.
It has been difficult for us to study the clause with the care with which it should

be studied. It changes our whole principle of taxation. Tax having been collected by the Inland Revenue, we from this House, by means of the clause, will be instructing the Board of Inland Revenue to pay out that money to these exempt bodies. Not only local authorities, but other exempt bodies which carry out particular functions in the service of the public, are concerned.
The Minister said that the new clause did not apply to unconditional contracts for sale. I am not quite sure what he intended by that phrase. It may be that I have not read the clause thoroughly enough line by line, but I do not find that mentioned in the clause. I do not know at what date or time within the five years, or whatever it may be, the unconditional contract for sale can be entered into to avoid the effect of the clause. If the Minister would explain that matter further in reply, we might at least hope to understand the clause a little better.
The clause arises from the process of embarking on the extraordinary procedure of net-of-tax purchase by public bodies. That is a procedure whereby the vendor will not be properly assessed by the Inland Revenue for the amount of tax for which he is liable. That is what we would like done—that the tax be paid to the Board of Inland Revenue, that the board accounts for it to the Exchequer and that so much of that money as the Government may decide should be paid to the local authorities. I have no objection to local authorities having the proceeds of the tax. In fact, I should like to see it go into their hands rather than be disbursed in other ways. But the distribution of that money should not be haphazard—a bit acquired by deduction from purchase money due and owing from local authorities and a bit given back to them when they are too slow to act when there is a transaction between private individuals. That is not the way in which to keep a check on local authority expenditure.
This subject has recently been much debated in Parliament. How on earth shall we be able to make an estimate or forecast of the revenue and expenditure of local authorities when side payments will be made to local authorities when they purchase property, and when they may say "Someone jumped the gun and sold his property when we indicated


that we wanted it. Therefore we must have the tax which arises from that sale."? This is a thoroughly bad clause. The procedure of net-of-tax purchase by local authorities is thoroughly bad.

Mr. Fairbairn: I am in a difficulty over the clause. Incomprehensible and lengthy as it is, I assumed that it meant what it said. I have been trying to work out, with some difficulty, and with reference to the Community Land Act 1975, what is a counter notice station. It did not occur to me that it meant anything else. I did not hear the correct words that my right hon. Friend the Member for Crosby (Mr. Page) used when he said what he assumed it meant. I assumed that the expression "counter-notice station" was a term of art, which even those who did not have the benefit or boredom of having discussed the Community Land Act in Committee would comprehend.
Under this Bill it is intended to give back to the community the wealth that the community creates. There are always members of the community at large who listen to debates in the House. If they read the reports of the debates, I should like to ask them whether they understood what the clause was about. I doubt whether members of the Government understand it. They may have had more chance to do so if they were present. I doubt whether members of the Liberal Party understand it. They might also have had more chance if they were present. I doubt whether any Members of the Scottish National Party understand or bother to understand what it is about. After all, it affects Scotland, and those Members represent the public interest when it comes to tax.
We start with an extremely dangerous and wide proposition. The clause reads:
(1) This section applies where, on a material disposal, a body (in this section referred to as "the acquiring authority)"—
I should have thought that it might have said merely "the acquiring authority"—
acquire an interest in any land".
I think "an interest" is an extremely dangerous expression.
We may obtain an interest in any land as a result of the slightest act. It need be only the smallest right or the smallest servitude. It may be anything. It may

be the right to walk one yard or the right to place one post. This clause covers "an interest". The right to put up a signpost on the land would be sufficient. There would then follow the procedure of compulsory purchase of the place in which we put the post. That would be sufficient to make the section immediately operative.
8.45 p.m.
We must consider the width of this incomprehensible section. I refer to the words:
within the period of five years ending on the date of the material disposal—".
If such act is done within five years, the land is caught.
Then we have the concept of the indication of an
intention to take into public ownership land which is or includes the whole or any part of the acquired land".
It is important to look then at subsection (3)(b) to understand that an indication has to be given only of an intent to take land into public ownership. In other words, if a local authority wants to obtain the benefit of this tax, all it needs to do for the purpose of this provision is to give an indication that it intends to take into public ownership the whole of my constituency.
We then see the words in subsection (3):
any indication of an intention to take any land into public ownership is given when a compulsory purchase order is made authorising acquisition of that land.…
In other words, a local authority does not need to acquire it or have it confirmed. It can require it, forget it, or tear up the application.
Under the saving clause, paragraph (a) is not covered, but only paragraph (b):
 … if, in a case falling within paragraph (b) above, the acquiring authority have, before the date of the material disposal served notice … that they have decided not to acquire any land",
it would then be known that that did not apply to paragraphs (a) and (c).
All the local authority needs to do to obtain this facility is to give notice of an intention to acquire, even though it never intends to carry it out, but it will be able to obtain the benefit if there is any sale of that land between private persons.
The provision goes on to refer to a private disposal of an interest in the designated land or any part of it. That covers anything. It covers rights of way, the granting of rights to pick fruit, and indeed any right. Thus, a local authority, if it wishes to acquire land, can say merely that it wants to acquire land, whether it really requires to do so or not, and any transfer of interest in that land from one individual to another would be caught under the provision.
That is a wide and absurd provision and was surely never intended by the Government when they hurriedly framed this clause—a clause that even contains a number of substantial misprints that misled me if not others. I find the clause almost incomprehensible but, when one is driven to try to discover a meaning in these terms of art, with all the misprints, the task becomes even more difficult.
What happens under subsection (3) if the local authority acquires any interest or acquires under compulsory purchase, or under any other of the bases, and then sells again? Supposing the local authority acquires land and then sells to a private individual, or acquires it and sells to a statutory authority; what happens then? Can it use that procedure merely to obtain tax from central Government funds? It seems to me that it can. There is no provision that the local authority can first cancel any intention to acquire and, secondly, when it has acquired immediately resell property or the interest or an option to any other authority, private or public, and then merely claim the tax.
We then come to the grand injustice of this noble situation whereby the Treasury is said to be going to give to the local authority what it so clearly deserves. The clause says:
… the relevant amount shall be equal to the whole of the previous tax; and in any other case the relevant amount shall be equal to such proportion (which may be the whole) of the previous tax as appears to the Board to be just and reasonable.
I do not know whether that is intended to mean anything. The definition of a "reasonable man" in English law is the man on the top of the Clapham omnibus. The definition of a "reasonable man" in Scottish law is not limited. We are all reasonable men in Scotland. Those of

us who are unreasonable are absent as usual—the Members of the Scottish National Party, many of whom, oddly enough are Englishmen but not Welshmen, I hasten to add to the Minister.
That the board should decide what proportion is "just and reasonable" is inequitable and reverts to the Money Resolution. Upon what basis will it do so? Will it be upon the amount originally claimed, or upon the amount that it was originally worth? It goes back five years. If the tax five years ago was £100, it would now be worth £50. What is "just and reasonable"? What are the guidelines and what is the basis on which this grandiloquent gesture is to be made?
Subsection (5) reads:
If, immediately before the material disposal referred to in subsection (1) above, any part of the previous tax remains to be paid then, up to the relevant amount, any paid after that disposal in respect of that tax shall be payable by the Board to the acquiring authority; and subsection (7) of section 39 above shall apply to any amount payable by the Board by virtue of this subsection as it applies to any amount payable by them by virtue of subsection (6) of that section.
That is a lovely subsection. I do not know what is means and I do not know whether the Minister knows what it means. Why include such a subsection at all? I shall be more than comforted if the Minister understands more than one line in 10 of the new clause.
Subsection (6), to which subsection (5) applies under reservation of Clause 39(7), says:
the relevant amount exceeds the part of the previous tax"—
"previous tax" is not defined—
which, immediately before the material disposal referred to in subsection (1) above, remains to be paid, the Board shall pay to the acquiring authority a sum equal to the relevant amount or, as the case may require,
That is a lovely piece of tight definition behind which the Minister sheltered on the previous debate. What is the meaning of
a sum equal to the relevant amount or, as the case may require"?
Does it mean anything? Does it mean that the board will give what it wants, that it will apportion a sum and say "That is your bit, little boy" and explain that that is the "relevant amount" and must be accepted?
The drafting is extremely sloppy and complicated. It is duplistic in its meaning, meaningless in its intention, and I am disturbed that a new clause of such complexity and so loosely drafted should be forced upon the House, which has no other remedy at this stage in the proceedings.

Mr. Sainsbury: I strongly support my right hon. Friend the Member for Crosby (Mr. Page) and my hon. and learned Friend the Member for Kinross and West Perthshire (Mr. Fairbairn) in what they have said about the appearance of a new clause at such a late stage. I have spent a fair number of hours in the past few months contemplating the various aspects of the Bill and I suppose, not being a lawyer or an accountant, that I can claim some basic knowledge of the objectives and methods in the Bill. I had to read the clause several times before I began to think that perhaps I had some understanding not only of what it was about, but how it was meant to carry out its intention.
One of the disadvantages of the clause appearing so late was that we had to hurry to put down amendments to it as we saw it. My first sight of it was yesterday, when I hastened to table an amendment, which, like the counter-notice "station" instead of "stating" in the clause was misprinted. That amendment is Amendment (c), which should be to leave out "five" instead of to leave out "give". The amendment, which is starred has not been selected.
My hon. Friend the Member for Melton (Mr. Latham) will no doubt seek to say something about the provision in the clause to which his amendments refer. All these matters are relevant. We must get the clause right now, because there is no other chance.
The Minister said that the clause would apply on only a few occasions. If he had turned over the page and seen all the other bits, he might have decided that it was better to withdraw it. It is extraordinary that we must have such a lengthy and complicated clause to deal with a matter that will arise on only a few occasions and that affects only local authorities and the Board of Inland Revenue.
Under the clause, if a local authority or other acquiring authority has given notice some time in the past five years of its intention to acquire a bit of land, and if before it acts on that intention the owner disposes of it to a third party, with the result that development land tax is paid to the Inland Revenue, the local authority will be entitled on acquiring the land to claim from the DLT office at Middlesbrough the tax that it would have been able to claim if it had bought the land from the original owner at the price paid by the third party. If that will happen only on a number of occasions, and if it involves only the transfer of money from the Inland Revenue to local authorities, one doubts not only the merits of so long and complicated a clause but the merits of incurring the cost of preparing it.
We have already heard of some of the apparent weaknesses in the drafting of the clause. No fewer than six times we find in it the dreaded words "in this section" or "in this subsection". In line 1 we read:
This section applies where, on a material disposal, a body (in this section referred to as the acquiring authority').
My hon. and learned Friend inquired with admirable restraint why we could not have the words "an acquiring authority" instead of
a body (in this section referred to as the acquiring authority')".
Anyone who has the good fortune, or the misfortune, to while away an occasional hour studying the Bill in full will find numerous other examples of this kind of phraseology.

Mr. Deputy Speaker (Sir Myer Galpern): I shall reserve that special pleasure for the Summer Recess.

9.0 p.m.

Mr. Sainsbury: Thank you, Mr. Deputy Speaker, and I wish you a very happy recess. But this clause cannot be allowed to wait. In subsection (1) we find the words:
a body (in this section referred to as 'the acquiring authority')
and in the very next line are the words:
referred to as the acquired land".
Why have the reference to acquiring an interest in any land? Why cannot we speak of acquiring an interest in the relevant land? Why must we have these


special definitions applying only within this new clause?

Mr. Fairbairn: It is perfectly possible to acquire an interest in land without acquiring any land. Therefore, it is quite impossible to describe acquiring an interest in any land as "acquiring land".

Mr. Sainsbury: I am grateful to my hon. and learned Friend for that important explanation about the nature of interest in land. It is a substantial matter to which I shall return. We have something referred to as "designated land" and then in subsection (2) there are the words:
if on a disposal (in this section referred to as the private disposal')".
At the end of the same subsection are the words:
an amount of development land tax (in this section referred to as the previous tax')".
Later are the words:
an amount (in this section referred to as 'the relevant amount')".
This goes on all the time. We need a bibliography or lexicon for every clause saying:
In this section the following terms shall have the following meaning".
It seems to me that very often the meanings are of a rather special nature.
My hon. and learned Friend the Member for Kinross and West Perthshire raised an important point which I must admit had not occurred to me in my first several readings of this new clause when he referred to acquiring an interest in any land. As he rightly pointed out, an interest can be a small matter, for example, wayleave permitting the posting of a sign, which was the example he cited. The acquisition of this kind of wayleave is common. In my constituency in one area there are many scheduled and listed buildings. The lighting system is somewhat old-fashioned necessitating the fixing of lights to the actual wall of the buildings because the streets are rather narrow. So the local authority acquires wayleave for signs and street lights for many of them. It is quite usual and in the normal course of events for the authority to wish on occasion to change the rights and acquire fresh interests.
I am sure that the Minister will reply to the point that my hon. and learned Friend has made. I ask him also to look at the conflict between subsections (1) and (3), because it seems to me that the natural way in which to read subsection (3), which speaks of taking any land into public ownership and refers to a notice stating that the acquiring authority intends to acquire that land, is not entirely compatible with the wording in subsection (1) where we have the phrase:
an interest in any land".
Again, in subsection (3) we have a reference to the actual acquisition of land whereas in subsection (1) we have a reference to the acquisition of any interest in land. There seems to be considerable conflict between these two parts of the clause.

Mr. Fairbairn: The Bill is so badly drafted that one of the idiotic descriptions in parenthesis that my hon. Friend describes equates the acquisition of land with the acquisition of an interest in land.

Mr. Sainsbury: I am grateful to my hon. and learned Friend for that comment but I was not sure whether that acquisition—if I may use that word—would apply in this subsection and right the way through. If that is so, we run into another problem, because a local authority cannot issue a compulsory purchase order to acquire a wayleave or leasehold interest. My right hon. Friend the Member for Crosby is the leading authority in the House on these matters, but my impression is that it is not possible to issue a compulsory purchase order to acquire a leasehold interest. The land is either acquired or it is not. A leasehold interest, which would be an interest in land, cannot be acquired.
These arguments emphasise that we have a clause which not only came in late, but may have come in untidily when we had no opportunity to discuss it. But I ask the Minister whether it is worth all the complications that will be involved. There will be a great many occasions when local authorities, acquiring authorities or bodies in this section referred to as acquiring authorities, will acquire land which has changed hands in the last few years where there is,


therefore, a high base value and where the authority will not benefit from the net of tax acquisition. It will have to acquire it at a reasonably high figure, and there will be no kick-back of tax to it from the DLT office, because there will not have been a previous notice.

Mr. Denzil Davies: I am sure that it is irregular to intervene at this stage in the hon. Gentleman's speech. However, I have been considering what has been said in this debate. Bearing in mind that the new clause was tabled very late—and I accept that it has been difficult for the Opposition to consider it properly or to put down amendments—I have it in mind, with the permission of the House, to withdraw the clause and to reintroduce it in next year's Finance Bill when it can be debated as part of that Bill in Committee and on the Floor of the House. I also give notice of the fact that it will be reintroduced in next year's Finance Bill so that, if there are any collusive deals meantime, no doubt poeple who enter into them will take that factor into account.
The clause is necessary, but I accept that it is unsatisfactory that the Opposition have had no opportunity to consider it properly or to table amendments. It is also unsatisfactory when the Opposition put down new clauses on Report, when it is equally difficult for the Government to amend them. But, in view of that, I am minded, with the leave of the House, not to press the clause now, but to reintroduce it in next year's Finance Bill. I propose to take similar action with regard to New Clause 3, which in part follows on from New Clause 2. They will be brought back in next year's Finance Bill, when the House will have more opportunity to consider them and to seek to amend them. But I make it clear to those who wish to enter into certain transactions that we shall be reintroducing them in next year's Finance Bill, and no doubt they will take account of that before entering into collusive transactions.

Mr. Sainsbury: I am sure that my right hon. and hon. Friends will welcome what the Minister of State said. I wish that I could pass to him the remainder of my note. The last words in my notes are "Withdraw: reintroduce next Finance

Bill." That was the suggestion that I intended to make to the hon. Gentleman.

Mr. Fairbairn: I hope that before my hon. Friend finishes reading his notes he will stress to the Minister that at the end of them are the words "and next time get it right.".

Mr. Sainsbury: I trust that that implication was written into what we have said already.
This is a matter of transferring tax back to acquiring authorities. The Minister referred to forestalling provisions, as though there were individuals who would go around trying to do things to their advantage. In New Clause 2 we are talking not of individuals doing things for their advantage, but of individuals carrying out transactions that could perhaps be to the disadvantage of an acquiring authority in due course.
Will the Minister consider whether the amount of administrative time and organisation and the number of extra employees who will be required in the DLT office will make this worth while, particularly in view of the length of time involved? If local authorities dilly dally for five years before making the acquisition, that shows that they do not deserve the DLT back.

Mr. Deputy Speaker: Does the House wish to pursue this matter?

Mr. Michael Latham: I do, Mr. Deputy Speaker.
First, the Minister has not formally withdrawn the new clause.

Mr. Deputy Speaker: I am waiting to give the Minister an opportunity to do that. If the debate has been concluded, he will formally do so.

Mr. Latham: With great respect, Mr. Deputy Speaker, the Minister has given a threat that he will introduce retrospective legislation in next year's Finance Bill. He specifically said that people should bear in mind what he said if they are to undertake colusive deals between now and then. That is a state of affairs that needs further exploration before the House leaves the matter. The Minister's announcement of his decision to withdraw the new clause has made the considerable discussion in the House today a complete waste of time, including


all the discussion on the Money Resolution.

Mr. Denzil Davies: I thought that that was what the hon. Gentleman wanted.

Mr. Latham: I do not know why the non. Gentleman should think that I wanted that at all. If he will wait a moment until I have developed my argument, he may be surprised.
Line 29 of the new clause refers to a compulsory purchase order being made. We are now told that there is to be legislation in the next Finance Bill that will catch deals done between now and then. It will necessarily, therefore, have retrospective effect, and it will also catch the cases where there has been a sale subsequent to the making of a compulsory purchase order which might not subsequently be confirmed.
If that is to be the case, that is a most unusual use of ministerial power. The whole point of the Town and Country Planning Acts—

Mr. Denzil Davies: It is not a question of the use of ministerial power. After considering some of the points that have been made, we have decided that the new clause will be reintroduced in next year's Finance Bill. It will then be open to hon. Members to debate it on Second Reading, in Committee and on the Floor of the House, and to consider all those points.
I thought that I was being helpful to Opposition Members, who quite fairly and correctly, said that the new clause should not have been tabled as a new clause on Report. The hon. Member for Melton (Mr. Latham) himself made the point in a previous debate. He said that it was very unfair to the Opposition that the Government had put down these new clauses on Report as there was then no chance to amend them. I am meeting very valid argument made by the Opposition. If Labour Members were in opposition, we should no doubt make the same valid argument. I am meeting it and withdrawing the new clause, but I am saying that it is necessary to reintroduce it in next year's Finance Bill, which will give ample opportunity to discuss all the matters that hon. Members have been raising.
I concede that it is unfair to discuss these matters now as the new clause was put down at a rather late stage. I am sorry that the hon. Member for Melton is being rather churlish in not accepting that I have met a fair point made by the Opposition.

Mr. Latham: I am not disputing the Minister's right to withdraw the new clause if he so wishes. All I am querying is the wording that he has used. This is putting people who choose to undertake collusive deals between now and next year's Finance Bill under notice. I do not knew what he means by that. What will happen to people who sell buildings between now and then? Will they be retrospectively taxed?

Mr. Denzil Davies: The hon. Gentleman has misunderstood the new clause. It does not tax any individual. It merely enables the Inland Revenue to pay money to the local authority. The new clause does not affect private interests in any way. I made that clear in the debate on the Money Resolution. Any private deal or sales entered into would not be affected. We are concerned only with the machinery of whether the tax should stay in the Consolidated Fund or go to the local authority. It does not affect private interests, and any reintroduction in next year's Finance Bill would again not affect any private interests.

9.15 p.m.

Mr. Graham Page: I thank the Minister for reconsidering this. The arguments we deployed earlier on the Money Resolution and later in this debate seem to have convinced the Government that this new clause ought not to have been introduced at this stage. The one thing which worried me when the Minister introduced the new clause was that he used the phrase "if there are no collusive transactions". If the clause is introduced next Session on the same basis as this new clause and, indeed, New Clause 3, there can be no question about collusive transactions between individuals. If those transactions occur, they will give rise to dealings between the Board of Inland Revenue and the local authority, but individuals can continue to make contracts as they please because it is only when they have paid over the tax to the board that the board accounts to the


local authority instead of to the Exchequer.
I hope the hon. Gentleman will agree that there will be nothing retrospective that will affect individuals. It may be retrospective in respect of the board and the local authority, but not in respect of an individual's transactions. I do not want to labour the point.

Mr. Deputy Speaker: Order. I take it the right hon. Gentleman is finishing his remarks.

Mr. Page: I am just finishing, Mr. Deputy Speaker. I am grateful to the Minister. I think we should accept what he has said, and I am sure that my right hon. and hon. Friends will do so.

Mr. Denzil Davies: I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New Clause 4

CHARITIES: DISPOSAL OF LAND ACQUIRED AFTER 12TH SEPTEMBER 1974

'(1) If the consideration which is received by a charity for the disposal of an interest in land which:—

(a) was held by the charity on 12th September 1974; or
(b) was held by another charity on that date and has at no time between that date and the time of the disposal been held otherwise than by a charity
is applied by the charity in acquiring a new interest in land which is to be used wholly or mainly for the purpose of the charity then the interest so acquired shall be treated for all the purposes of this Act as held by a charity on the 12th September 1974.

(2) On the disposal by a charity of an interest in land to which the preceding subsection does not apply and where

(a) during the whole of the period of seven years immediately preceding the date of disposal the interest has been owned by a charity (but not necessarily the same charity throughout) and
(b) the land (as distinct from the rents and profits thereof) has not been held otherwise than wholly or mainly for charitable purposes
than in determining the amount of any realised development value for the purposes of this Act there shall be deducted so much of the net proceeds of the disposal as is represented by the difference between:

(i) the relevant base value at the date of disposal of that interest and

(ii) its value on that date on the assumption that planning permission would be granted for any development by virtue of which the use of the land would be made to correspond with the use which prevails in the case of contiguous or adjacent land'.—(Mr. Wakeham.)

Brought up, and read the First time.

Mr. John Wakeham: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this it will be convenient to take New Clause 8 (Reduced rate of tax for charities).

Mr. Wakeham: I have moved this new clause because I was impressed by arguments put to me that charities had not been treated fairly under the Bill. Whatever the merits or demerits of the Bill, it seemed to me that in Standing Committee hon. Members wanted to be fair to charities, and I thought it right to give the House an opportunity to put the matter right. I do this not to score any political point, but because the new clause is moderate and limited and would attract support from all parties in the House.
Its objects are twofold. The first is to to secure roll-over relief for churches and charities for changes only in their operational land. The second is to avoid the concessions that the Government rightly gave under the Community Land Act from being eroded by the development land tax.
I make no secret of the fact that I prefer charities to be exempted from tax which, by and large, has been the case from time immemorial, although some people would say from the time of Henry VIII. I come from the constituency that produced Anne Boleyn. If it was Henry VIII who last taxed charities, I rest my case on that. Nevertheless, I have put down some amendments to Clause 25 to cover that point.
My purpose in New Clause 4 is much more limited than a general exemption. It is specific and particular. If the argument is that there is an abuse by charities of any of the provisions of the Bill, the way to deal with that is by revising the legislation dealing with charities rather than by including them in the Bill.
Subsection (1) of the new clause introduces a roll-over provision to ensure that operational land—that is, land used by


the charity for its own purposes and not held for investment and income—should be treated as White Paper day land and thus developed or sold without liability to development land tax. Churches and charities need to replace their operational land for all sorts of very good reasons—changes in population, the needs of a community, compulsory purchase, road development schemes, and so on. It seems wrong that replacement land acquired after 12th September 1974 should lose the benefits of the land that has been replaced.
There was a great deal of discussion in the Standing Committee, of which I was not a member, of the treatment of charities. From the record of those proceedings it seems that too little weight was given to four points. First, although it is true that since White Paper day land may be sold at market value and the base value for DLT purposes of any land bought will be higher, which in turn means that when the replaced land comes to be sold, any DLT will be correspondingly less, the benefits of this wil wear off as sale follows sale. The number of changes that churches and charities need to make over a period of years is perhaps more than the Committee considered.

Mr. David Mitchell: On the point about the position of church or charity land that will be redeveloped and needs to be available on an on-going basis to finance the purchase of further land, one knows how important it is in the case of churches to be able to move out of dying city centres and into expanding and new towns, such as I represent. They must have finance to do so and much of it comes from the sale of older property. But does my hon. Friend not recognise that the same is true of a multitude of businesses, particularly small businesses, which have an enormous contribution to make to the economy and which will be desperately damaged by the Bill as it stands?

Mr. Wakeham: That is a valid point and I would support any proposals to assist small businesses in this way. But my argument at the moment relates to charities.
This is a case in which common sense and reason might prevail. Although there

are not many Government supporters listening to my arguments, at least two Ministers are present, and I hope that my arguments will receive favourable consideration. Although my hon. Friend's comment is valuable, it widens the argument and if I adopted it I might not get the support for which I am hoping.
My second observation is that where a church or charity has to give up land which is to be developed for its charitable work, it seems wrong, just at the time when it needs all the cash available, that a substantial part of its resources should be taken away in taxation. That is analogous to my hon. Friend's point.
The third comment, touched on in Committee, is that this tax, so far as it affects charities, brings a new problem to those who administer them. For the first time they have to concern themselves with the intricacies of tax planning as well as all the other problems of running and administering their charities.
As a chartered accountant I am prepared to declare an interest in this matter, as charities will have to seek professional advice to deal with problems arising from development land tax. I do not think that this additional burden should be put on charities at the present time.
The fourth topic I want to raise, which was given too little consideration in Committee, is that the purpose of the Bill is to give benefit to the Community from the gains from land. Surely charities do just that. By leaving development gains in charities, surely we are achieving the broad objective of the Bill.
Subsection (2) of my new clause makes sure that the concessions announced on 15th July last year and in part of the Community Land Act are not eroded. These concessions mean that with land held by a charity for seven years compensation would be based on the value of that land on the assumption that planning permission would be granted and not on the current use value, which is often very low. This is particularly the case when considering the position of city churches that move out to the suburbs. As matters stand now, for land acquired after White Paper day this concession can be wiped out by development land tax.
The Government would argue that this concession does not come in to effect


until the second appointed day and by that time the taxation provision may be very different. But they recognise that there may be a problem here. They would argue that they would want to deal with it then and not now.
My new clause would put the matter right now and clear up the present doubts and uncertainties. It would enable charities to plan their affairs some years ahead knowing that they will not have a concession given on the one hand and taken away on the other by development land tax.
My new clause is moderate and reasonable. It ensures that any benefits arising from the tax concessions go directly to the charities and therefore to the community. As such, it should commend itself to all parts of the House, and I hope, to the Government.

Mr. Sainsbury: I should start by declaring another interest—I am a trustee of a number of charities including one in particular which is a fairly substantial holder of interests in land, some of which, in my opinion, are becoming near to being ripe for development. This will present problems to those entrusted with the care of the charity's affairs.
I mention that particular one because it is an example of the fact that whereas obviously a very large number of charities do not have any property at all, or do not have property remotely covered by the provisions of the Bill, there are a number, including some substantial ones with a wide scale of operations, which hold a large proportion of their assets in the form of property. This is not surprising, because often the property was acquired by way of endowments, often from the founder of the charity.
That is what happened in the case of the charity I mentioned. The founder owned a farm in what is now a suburb of London. Unfortunately, the founder was not sufficiently far-sighted to ensure that his farm occupied the best pitch in the shopping centre, but he did not do badly and the charity has benefited substantially over the years. Like other charities, it received property in the form of endowments. Perhaps that is why so many charities treat property as their most important source of funds with which to carry out their activities.
9.30 p.m.
The other point to be borne in mind is that charities are perpetual bodies. The trustees for the time being of any charity must be conscious at all times of their responsibility to pass on the assets of the charity to their successors over the generations. They do not envisage that they come into being to carry out a specific function and that when that is done the charity will be wound up. That happens, but only rarely. Far more frequently the charity will expect to continue in its appointed rôle for as far forward as the mind can conceive, and the trustees will think of their assets in that context. This is an important factor to bear in mind when discussing these related matters of charities.
In the Committee the Minister went some way to recognising, if somewhat grudgingly, that the proposals in the Bill presented a problem to charities. He said:
I noticed that the hon. Gentleman said 'Long-term—50, 60 years, 100 years'.
He continued:
It is a long-term problem … if there is one, but I do not think that in the long term there will be a problem because people in just these circumstances will have taken into account legal obligations and liabilities".—[Official Report, Standing Committee J, 29th April 1976; c. 764.]
I think that the liabilities he had in mind at that point were taxation liabilities.
It seems to be generally accepted that we go back to the time of Henry VIII for tax exemption for charities. We have a long and well-established tradition of such exemptions. I do not wish to raise the argument, which has been raised occasionally in other places and also when we were discussing the Community Land Bill, as to whether all charities are as charitable and deserving as one another.
There is the problem of definition of charities. It is accepted that they do an important and worthwhile job in the community. It is at times of financial stringency when the local authorities are having to scrutinise all aspects of their expenditure on, among other things, personal social services that the charitable bodies have a particularly important rôle to play. They go some way to filling gaps in the provision of services. One of which I am particularly conscious in


my constituency, where there are many elderly people, is that of sheltered accommodation. Whatever we may like to think about the way charities manage their affairs, I should have thought it would be fair to say of them, as of other bodies, that it is dangerous to introduce artificial distortions.
One of the matters which was of considerable concern to those of us who served in the Committee stage of the Bill was the extent to which the introduction of taxation of charities—for the first time since the reign of Henry VIII, or for the first time ever—would result in distortion of the way in which they manage their affairs. It is only in this one respect of the development land tax that it is proposed that charities should be subject to taxation.
The Minister, during our fairly lengthy discussion on this matter in Committee, did not suggest in any way that other forms of taxation should be levied, and I have not heard the suggestion put forward from the Government side. Suppose that we have this tax on charities. A charity which holds property may for some reason decide to sell some land. One very likely reason for this is that the local authority wishes to acquire some of its land for a road-widening scheme. The charity may therefore dispose of some of the land which it held on 12th September 1974, and which it may have held for many hundreds of years.
The nature of the charity is immaterial. Having disposed of the land, however, it is very likely, in my experience, that the trustees of that charity would wish to reinvest the proceeds in property in order to produce income for their charitable purposes. Traditionally, and for the reasons I have already referred to, charities may well wish to continue to hold a substantial proportion of their assets in the form of property.
Having acquired other property, as the Bill stands—and without the benefit of this ingenious clause—those charities will then be holding an asset on which they might become liable to tax many years ahead when development or redevelopment is appropriate for that particular asset. They will, of course, be entitled to the same exemptions as everybody else with regard to development land tax, and these will themselves have a distorting

effect since they will tend to make owners of property try to avoid any form of redevelopment which would make them liable for development land tax. This will therefore tend to make people concentrate on redevelopment which is within the exemption limits, irrespective of whether that is the appropriate form of redevelopment or the best form of economic use of the particular site.
That is a distortion which charities will share with everybody else, but the grave distortion that the clause will avoid is that of having one assets of a charity subject to taxation in these circgumstances whereas all the other assets would not be liable to tax. This will be a grave distortion and a matter of difficulty to the trustees. It will be an increasing distortion. Over the years, more and more of the property of charities will be property which they did not hold on 12th September 1974.
I find particular merit in the clause, and I am convinced that unless we can adopt a formula such as this—a particularly ingenious and satisfactory one—charities will in due course be increasingly damaged by the provisions of the Bill. I hope that the Minister will accept the new clause and continue the historic, traditional and valuable exemption from taxes given to charities in response to the work which they and nobody else can do in the community.

Mr. Douglas Crawford: I support the new clause. I apologise for my absence earlier. I was in the Standing Committee considering the Finance Bill upstairs.
During proceedings on the Community Land Bill, I made a statement of interest to the effect that my father was a minister in the Church of Scotland.
The hon. Member for Hove (Mr. Sainsbury) said that Henry VIII was the first person to tax charities in England.

Mr. Sainsbury: I think it was suggested that Henry VIII was the last person to tax charities.

Mr. Crawford: I apologise to the hon. Member. I was about to point out that charities and charitable institutions had been the foundation of many great educational establishments in Scotland.
I echo the plea of the hon. Member for Hove for common sense. It is important to ensure that the operational land of churches should be free from taxation as long as it remains operational in the proper sense of the word. The church must be able to move its work for the community freely wherever the need arises.
I reiterate the plea in the letter from the Churches Main Committee which has, no doubt, been received by a number of hon. Members. It states:
given the fact that there already are exemptions in the Bill, including protection for land which the Churches happen to own on 12th September 1974, we cannot believe that this further small exemption for land acquired after that date would do serious damage to the land scheme".
The Minister should be aware that having to pay deferred tax at that stage will inevitably eat into reserves which churches need to restart work elsewhere. A development by a church or charity is a development for its own use. Even if it does not directly serve the operational needs of the church, the resulting capital or income is an important part of the financing of an operational development and the cost of maintaining it. A constantly recurring example quoted by the Churches Main Committee is that of the redevelopment of a church site with the church building a community centre, shops, offices and so on. The income from the latter is an essential part of the financing of the former. In no circumstances can the realised value of church land be used for anything other than charitable purposes.
My constituents, like those of most other hon. Members, are very concerned about this matter. I hope that the Minister will accept the new clause.

Mr. Stephen Ross: When I first saw the new clause on the Notice Paper, I felt that it had a great deal of merit. I apologise to the hon. Member for Maldon (Mr. Wakeham) for missing part of his speech. Unfortunately, I was occupied elsewhere in the building. I very much support the new clause because it goes to the root of the problem.
We argued the case for charities on the Community Land Bill, but we got very little for them apart from a 10-year exemption. Now, everybody is concerned about what will happen when that 10-

year period is up. So far, the Government have not brought forward any proposals to meet the calamity which will affect charities at that time.
I have suggested on a number of occasions that if the Government stand absolutely firm and insist that charities must meet their obligations in the same way as others after the 10 years have expired, at least some sort of compensatory fund should be set up to enable them to be compensated in the same way as landowners and others were compensated under the Town and Country Planning Act 1947. However, that suggestion has fallen on deaf ears. Therefore, we look to a clause such as the one now before us to try to get over the problem, and I think that it overcomes it. It is ingenious and sensibly drawn. Clearly, someone has spent a great deal of time drafting it. I hope that we shall not be told that there is some illegality about the drafting. It makes sense to me, and I think that it deserves the support of all our Members.
9.45 p.m.
As I understand the clause, charities will be able to reinvest the money. That is what nearly all charities do. I have acted for quite a number of them in my time, and I draw the Minister's attention to the activities of the Haig Homes on the Isle of Wight. This charity has done a great deal of good in my area. It has been selling off land for development purposes, and the money has been reinvested to provide money for further homes for the incapacitated. It has been used to provide a lot of old folk's homes as well. When I was canvassing round them only a short while ago, I thought what a credit they were. That sort of thing will not be able to be done again if the law stays as it is.
Goodness knows what will replace the charities and the rôle they play in our society if our economic situation does not improve radically. We already have enough trouble trying to deal with social security and social service problems. We fear that cuts are coming. No doubt there will be cut-backs—indeed, there have been some already. If the charities have to cut back because they are unable to raise the necessary finance, what is to be put in their place? We are entitled to hear from the Government


what they intend to do about these bodies.
The second part of the new clause seems to be fair and realistic in its approach. I hope that it means that only a restricted amount of taxation would be applied to land which a charitable body might have purchased on the open market and held on to for at least seven years. Surely that is long enough to enable anyone to accept that there was no degree of speculation.
As I read the clause, if a charity sells it is liable to taxation. I hope that I have understood correctly and that the taxation would be limited to relating the development value of the land as sold to adjacent land of a similar type—in other words, a limited liability. Nevertheless, in that event charities would be facing their responsibilities. I had hoped that we should find it possible to release them altogether, but perhaps that is just not possible. We have had many arguments about that point. The second part of the clause accepts that the charities will have to pay their taxation in the same way as the rest of us if they have bought land which has not been in charitable ownership, or has not been reinvested from land asssets which they have already sold.
I believe that the clause should be accepted by the Government. If it is not, we are entitled to know what they will do to help the many charitable bodies which play such an important rôle in our lives.

Mr. Clegg: I support what my hon. Friend the Member for Maldon (Mr. Wakeham) said in introducing the clause and what has been said by other hon. Friends. Almost from the time I first set foot in the House I have found the Labour Party's attitude to charities ambivalent.
The first new tax I heard introduced when I became a Member was selective employment tax. In the first draft of that tax to be put before the House there was no exemption for charities. It was not until there was an outcry against it that such an exemption was made. My colleagues who suffered in Committee on the Community Land Bill will know that the Government had to be forced by the outcry from the churches and other

bodies to modify their original proposal. I believe that this modest clause should be accepted.
My hon. Friends and others have drawn attention to the work that is done by charities. I do not think we need stress that overmuch. Labour Members like certain charities but dislike others. I believe that behind this time limit that they have put on exemptions for charities is their dislike of educational charities.

Mr. Jasper More: My hon. Friend referred to hon. Gentlemen opposite. I suppose by that he means one Minister, two rather bored looking Whips and one elderly, respected Member—the hon. and learned Member for Hackney, North and Stoke Newington (Mr. Weitzman)—who clearly has not come in to listen to the debate.

Mr. Clegg: I am grateful to my hon. Friend for his intervention. I think that most hon. Members opposite have come in because this is the coolest place in the Palace of Westminster. I am sure that they have not come in to listen to the sparkling speeches being made by Opposition Members and the deafening silence from the Government side.
During the late night watches on the Community Land Bill we found that there had been no forward thinking by the Government about charities before preparing that legislation. We had to probe and probe again to discover what their intention was. We got some very strange replies at 5 o'clock in the morning. They said that some charities would not be affected. They did not know which those charities were. They could not define them. Yet this Government pride themselves on planning.
We are talking about the long-term future of charities. The new clause will go some way towards reassuring charities by giving them a longer-term future and—what hon. Gentlemen opposite are always saying—time to plan in the long term as well as in the short term. For those and other reasons advanced by my hon. Friends I fully support the new clause.

Mr John Cope: I rise to support the new clause so ably moved by my hon. Friend the Member for Maldon (Mr. Wakeham) and to congratulate him on the way in which


it is drawn, which should commend it to the House and to the Government. This is not what might be called a blunderbuss paving clause. It is precisely and carefully worded so as to appeal, in the right spirit, to hon. Members on both sides of the House and to the Government in particular.
I want to refer specifically to the position of churches. My constituency includes part of two dioceses of the Church of England. The diocesan authorities in both dioceses have approached me about this tax and how it will apply to them. I have been in otuch with Treasury Ministers, and they have set out at length their opinions as to why the tax should remain as it is proposed in the Bill. I do not find the letters from either the Minister of State or his colleagues very satisfactory.
The principal argument advanced by the Minister of State in correspondence, which has been advanced in other places as well, is that to give full exemption to charities would be contrary to the principle that, as an integral part of the Government's land scheme, development land tax is to pave the way towards transactions at current use value, that develoyment land tax is therefore different in nature from other taxes, and that it does not follow that institutions at present exempt from tax should be exempt under the new arrangements.
I do not think that development land tax is different in nature from other taxes. The rules are different, but that is the position with any tax. That is true comparing income tax with corporation tax, just as it is comparing capital gains tax with development land tax.
The purpose of the Bill is simple. It is to tax gains made on the development and sale of land. In many respects it is similar to the capital gain tax, except that its rules are drawn up to apply specificaly to land. It has the full special rules that apply to development. It is not different in its nature from any other tax. On the contrary it is similar to the capital gains tax.
My hon. Friend the Member for North Fylde (Mr. Clegg) made an interesting point when he mentioned something which I had forgotten, although I remembered it when he mentioned it. The selective employment tax as originally

drafted was intended to apply to charities on much the same arguments as are advanced for the development land tax. In the former case, as a result of the outcry and the fuss made by charities and Members of Parliament, the Labour Government very properly decided to continue the exemption started by King Henry VIII. In his letter the Minister of State argued that the tax was an integral part of the Government's land scheme. However, the Government changed their mind about their attitude to charities in the Community Land Act.
The development land tax is intended to pave the way towards transactions at current use value. Income tax is intended to pave the way towards income being received net of tax. That is the purpose of income tax. We may use similar arguments about any tax. This tax is intended to extract from those who would otherwise have it a proportion of a gain.
I cannot sec that there is any difference between a charity that buys and sells shares and one that buys and sells land. Later in his letter the Minister of State admitted that there might be problems of finance in the long term for churches, although he referred especially to voluntary schools. The extract reads:
we do not think the legislation will harm the voluntary schools in the short or medium term. There may be problems of finance in the long term.
The Government have accepted part of our case already. In Clauses 24 and 25 they accept that the position of a charity is different from that of other people. They accept that charities are in a different situation. In one sense we do not argue that charities are different from other organisations. We argue that they are wholly different, or only different in part, but we ask that when this tax is introduced, they should therefore continue the arrangement that has obtained for so long for other taxes.
I read an extract from the letter of the Minister of State, answering points in a letter addressed to me by the Bishop of Bristol. That letter was not exclusive to me. Similar letters went from the bishop to other Members of Parliament, including the Second Church Estates Commissioner. I am not sure where he is at the moment, but I am assured that he is in Committee considering the


Finance Bill. The hon. Member who so informs me has come from that Committee to take part in this debate.

10.0 p.m.

Mr. Peter Morrison: Does my hon. Friend agree that the Second Church Estates Commissioner should be here when we are discussing this important new clause?

Mr. Deputy Speaker: Order. We cannot produce the Second Church Estates Commissioner here.

Mr. Cope: I appreciate that you, Mr. Deputy Speaker, cannot produce him here. He is not yours to produce, any more than he is the creature of the rest of us to produce. It is entirely for him to decide whether to be here.
I tabled some Questions on this matter to the Second Church Estates Commissioner. In a Written Answer on 19th May I was told:
The potential cost to the Church is thus not only a matter of money but also of loss of mobility and effectiveness in its organisation."—[Official Report, 19th May 1976: Vol. 911, c. 582.]

Mr. Crawford: It is a little unfair that the Second Church Estates Commissioner has been criticised for not being present, because I know from personal experience how difficult it is to be in two places in this building at the same time. I think that Opposition Members are being a little hard on the Second Church Estates Commissioner.

Mr. Cope: I was quoting the Second Church Estates Commissioner with approval. I entirely agree with what the hon. Gentleman said in that Answer, and I thought that the House wanted to be reminded of it.
The Bishop of Bristol also reminded me in his letter in April that it was envisaged by Parliament, when the Education Acts were enacted from 1944 onwards,
that the funds required by the churches to sustain their participation in the national maintained schools system would be derived mainly from the sale of land and buildings no longer required for educational purposes.
A good deal of land and a number of those buildings will have been held for a number of years, and in some instances for many generations, and will not be

affected by the Bill because they will have been held already on White Paper day. It is a great restriction on their ability to manage that land if the tax is to apply as proposed in the Bill as it stands.
The bishop also said in his letter to me—and this was said in full knowledge of the Bill as it stands—
The application of development land tax to the proceeds from a growing proportion of such sales will inevitably in the long term stifle and frustrate the efforts of the churches to make what they and Parliament have hitherto seen as their proper contribution to the schools system of the country.
We all know that there are those in this House who do not wish the contributions of the churches to the school system to be as great as it is. There has been some controversy over this matter in the last day or two, and I shall not embarrass anybody by going into that subject, but it is surely important that the churches should make a contribution to the educational system, not least by means of the church schools.
The bishop continued at another stage in the letter to say that it appeared to him that the Bill failed to recognise that the financial resources of charities were deployed in the interests of the community at large. It raises the whole question of who best can look after the resources in the interests of the community. Are we saying that money can be looked after in the best interests of the community only when it is in the hands of a local authority or the Government?
Charities in general and churches in particular have a great part to play and a contribution to make in our national life in that respect. To introduce the tax and to apply it to charities across the board would be a backward step. But the Government have not done that. They have introduced special arrangements which, to a certain extent, recognise the special position of charities. I urge them to accept the new clause and follow through the logic of their arguments.

Mr. Michael Spicer: One must ask why the Government are unlikely to accept the new clause. As my hon. Friend the Member for Gloucestershire, South (Mr. Cope) has said, they have already gone some way. I am sure the Minister will argue that it is as far as they can go. One must therefore ask why they will not


go the whole way and why they have introduced a new tax on charities. One must ask why Socialists do not like charities, because that goes to the root of the matter.
If the Minister follows the line he took in Committee, I suspect he will use arguments which are basically Socialist. One understands those arguments even if one does not agree with them. He will say that charities do not represent the entire community, whereas the Bill does. He will argue that the sum of the whole is in some way greater than its parts.
That is a Socialist view and one with which we totally disagree. We believe that the sum is equal to the parts and that if the parts are bad, the sum will be bad. Somehow, in the tradition of Rousseau, the Government's philosophy is that there is something greater than the individual parts of society. But if one does not have charities which are thriving, all the benefits that charities bring to the whole will be damaged. Socialists dispute that. That is why one of the arguments that the Minister will use is that charities, being only a single part of society, do not benefit society as much as his Bill, which will benefit everyone.
There are two reasons why Socialists do not like charities. The first is that in some way they believe that charities in many of their forms—such as charitable housing associations—are a threat to State institutions. In Committee, the only real contribution from the Government Back Benches—and there were only about three such speeches—was an intervention by the hon. Member for Woolwich, East (Mr. Cartwright) in our debate on charities. He was inflamed by a speech by my hon. Friend the Member for Hove (Mr. Sainsbury), who claimed that in his constituency certain housing trusts were beneficial. The hon. Member for Woolwich, East said that that was a reflection upon the provision of housing by local authorities. Socialists believe that many charities are a threat to publicly-provided benefits. That is a fundamental reason why I suspect the Minister will not accept the clause.
The second and perhaps related reason is that the trade union movement believes

that many charities form a threat to its wage bargaining position—for example, in the work undertaken by the WRVS.

Mr. George Cunningham: How?

Mr. Spicer: It happens where charities' benefits are provided by voluntary labour. I think of the mini-buses driven by voluntary drivers from villages to the towns, carrying pensioners to collect their pensions, as happens in my constituency and many others. That is seen as a threat by workers in the nationalised bus industry. It is of concern to the charities in question that they should not be seen overtly to threaten the trade unions involved. There are other examples that I shall be happy to give the hon. Gentleman if he wishes to pursue the matter.
For those reasons I can understand why Socialists, at the bottom of their hearts, do not like charities. They prefer to see benefits provided by the State, preferably operating from the centre. That is part of the Socialist ethic, and there is no need for Labour Members to be apologetic about it. That is what Socialism largely stands for—the provision from the centre by the State of all benefits. Charities constitute a threat to that Socialist objective.

Mr. George Cunningham: No.

Mr. Spicer: It is no historic accident that a Socialist Government for the first time have introduced a tax on charities. The Minister may well argue that he has given way here and there on specific aspects of the tax, but at the end of the day charities are to be taxed for the first time. That is the thin end of the wedge, the beginning of a new fiscal concept.
I entirely agree with my hon. Friend the Member for Gloucestershire, South that it is not a unique tax. I suspect that in the long term it will be developed, if Socialist Governments persist, and that it will be welcomed by the mass of those who believe in Socialism, because it is their objective ultimately to prohibit private initiative of that sort. That is what Socialism is all about.
So I enthusiastically welcome the new clause. I hope I have not over


caricatured the arguments. I see no reason why the Minister should be afraid of those arguments. I am sure that he believes in them because they are what

his party firmly believes. That is why I fear that we shall not win over the Government in this matter, for on this issue of charities there is a difference of principle between us.

10.15 p.m.

Mr. Peter Morrison: I rise to support and congratulate my hon. Friend the Member for Maldon (Mr. Wakeham) on moving New Clause 4. It was certainly interesting to listen to my hon. Friend the Member for Worcestershire, South (Mr. Spicer), who pointed out that the Socialist Party cannot abide charity. Labour Members laugh and object, but we know that at the end of the day they believe that the central Government and the State are better able to do what charities do, despite the fact that a great many people are voluntarily giving their time to charities to help others who are in real need. This is the very reason why the Government have decided to proceed with this provision on charities. They want to do what they can to undermine charities.
My hon. Friend the Member for North Fylde (Mr. Clegg) said that the Government were somewhat ambivalent towards charities. He was certainly being rather charitable towards the Socialist Party. I do not believe that the Government are remotely ambivalent, but my hon. Friend may have a point, because I recall to the House what was said by the right hon. Member for Huyton (Sir H. Wilson) when speaking at the annual general meeting of the National Council of Social Service. I quote:
Voluntary organisations have the ability to provide a form of service which the State is ill-fitted to provide, however dedicated its administrators".
Yet Labour Members support their right hon. Friend. If they really meant to do so, why are they not coming into the Lobby with my hon. Friends and myself tonight backing this new clause? The reason is that in their heart of hearts they do not want to back charities. They do not want to feel in their hearts, as I and my hon. Friends certainly believe, that voluntary organisations have done and are doing better than the State can do.
As regards churches, my hon. Friend the Member for Worcestershire, South developed the arguments very cogently. In my constituency there is a contracting city centre, to the extent that many people are moving from the city centre to outlying suburban areas. If DLT had been

in existence over the last 100 years, the situation of the churches in my constituency, as they sell off land in the city centre to build new churches in new council or owner-occupied estates outside the city centre, would be decidedly more difficult than it is. Such places are utterly essential to the community.
I have absolutely no doubt that my hon. Friend the Member for Maldon is right in putting forward the new clause. If hon. Members opposite really believe in voluntary organisations and want charities to go on doing what they have been doing, not only over the past decade but in past centuries, the least they can do is to abstain rather than vote against my hon. Friend's new clause.

Mr. Esmond Bulmer: I support the new clause, and I wish to speak particularly for the Church of England and to explain my reasons for concern.
Any hon. Member who has had anything to do with the finances of the Church in these times of inflation will understand all too well what havoc inflation has played, especially with the upkeep of buildings and with trying to keep pace with paying proper wages and salaries. These financial pressures mean that a great deal of reorganisation will be forced upon the Church, which in turn will mean a number of buildings having to be relinquished and a great number of new buildings being erected to meet the changing needs of society.
Equally, many of our ancient churches and the buildings connected with them are a valuable part of our heritage, and the funds that the Church can still obtain from its other developments go towards their upkeep. I should like to see all the Church's funds exempted from this tax. However, at least let us have what the new clause proposes should be held.
At present we also have a substantial cut-back in public services. There is a great deal that the Church can do to provide a safety net, and in my constituency and in the constituencies of others of my hon. Friends there is a great deal that the Church is doing. It depends, however, upon voluntary subscriptions. In many ways, it is uniquely successful in drawing on voluntary funds in a way that


the State has not succeeded in doing. For all these reasons, I support the position of the Church as being a privileged one.
If the Minister visited my constituency and travelled up the new ring road, he would find on his left-hand side first the parish church, then the Methodist church and then the Trades and Labour Club. If he went back into the history of the town, he would discover that the land was owned by the Church of England and that the Church had recognised the needs of the Methodist church and of the Trades and Labour Club.
I do not believe that the Government wish to put any obstacles in the way of the development or the building of the local Trades and Labour Club or in the case of my constituency, that they will do anything other than welcome the flexibility shown by the Church of England. Under the terms of the Bill, however, that flexibility could be destroyed. In the future, those concerned might have to say to people requesting the release of church land: "In the interests of the Church, we think that we may need it and, therefore, we cannot release it for your purposes."
For that reason, I echo what my hon. Friends have said, and I say finally to the Government that we have an established Church which receives no help from the State. The State might at least allow it to hold what it owns.

Mr. Patrick Cormack: The Minister of State is a Welshman. I hope that his Welsh heart has been moved by what has been said and that he will remember what his compatriots owe to the free church, especially in Wales. He must realise that for this Government to strike a blow at the very heritage which has put him on the Treasury Bench would be a sad, sorry and disgusting spectacle.
When we consider the enormous contribution to social advance which has been made by modern charities in recent years and upon which the Labour Party draws in more ways than one, it is difficult to understand why this attack has been mounted. I have in mind a body like the Child Poverty Action Group, though perhaps I should not at the moment. Let us consider instead Shelter and other similar bodies. All these are

charities. They have contributed as much as any hon. Member in any part of the House and as much as any Government towards social advance and thinking. But it is at bodies like that that the Government are striking a blow if they do not accede to the Opposition's request.
I cannot think that any man of sensibility, any man with a sense of history and perspective, could possibly refuse in any churlish spirit the moving arguments made so eloquently by my hon. Friends. However, I fear that my hon. Friend the Member for Worcestershire, South (Mr. Spicer) possibly put his finger on the point—although I hope I am wrong—when he talked about Socialism and charities. There is within the Socialist Party an unfortunate tendency towards uniformity—that all social good must be engineered and bestowed by the State, that everything that is to be for the benefit of the people must be engineered by some mammoth organisation, and that that must be the State. That is the argument of the more extreme Socialists.
I cannot think that the Minister is unable to comprehend the force of our arguments. I cannot think that with his Welsh background he is unable to appreciate the strength that is in diversity. However, in justice to my hon. Friend the Member for Worcestershire, South as much as anything else, we must follow this point through.
It would seem that there are far too many in the Socialist Party today, and far too many on the Labour Benches, who feel as my hon. Friend said they feel and who regard anything which challenges State provision as being wrong. Whether it be in the provision of independent education or the provision of private medicine, the existence of charities doing very often better than what the State does causes such people to feel guilty, and therefore they oppose.
I was particularly glad to hear that ringing quotation from the right hon. Member for Huyton (Sir H. Wilson), who is at this moment, I understand, at Buckingham Palace. I trust that he is not submitting another charitable list while he is there.

Mr. Fairbairn: Considering that the right hon. Member for Huyton (Sir H. Wilson) was in America yesterday on the


benefit of private funds, charitable funds subscribed to the Arts Council, it is surprising that he got back so quickly.

Mr. Cormack: The right hon. Gentleman was in America as a trustee of the D'Oyly Carte Opera Company. In what more fitting capacity could he go to America, or anywhere else?
However, let us not digress on the manifold attributes of the latter-day Pooh-Bah. Let us say that when that quotation from the right hon. Member for Huyton rang through this Chamber a few moments ago one saw true appreciation of the enormous virtues and values of charitable institutions. He saw—after all, if he saw it, it must have been fairly apparent—that charities can contribute so much more than the monolithic apparatus of the State. [Interruption.] I wish that my hon. Friend the Member for Burton (Mr. Lawrence) would switch off the alarm in his wristwatch, because there is no inhibition on the time we are taking in debating this extremely important measure.

Mr. Ivan Lawrence: I apologise if my hon. Friend thought that I was signalling to the effect that his speech was going on for too long. I use the alarm to indicate to myself when my own speeches are going on too long. I listen with the greatest pleasure to my hon. Friend. I hope he will continue for many more hours.

Mr. Cormack: I am greatly encouraged. I merely hope that that signal has not aborted my hon. Friend's speech, because if that has signalled the end of the speech that he was due to make we shall all be very sorry.

Mr. George Cunningham: Get on with it.

Mr. Cormack: I am most grateful to my hon. Friend—and, indeed, to the hon. Member for Islington, South and Finsbury (Mr. Cunningham), who has displayed considerable perspicacity since his entry into Parliament. He knows in his heart the tremendous contribution that charities must have made towards the welfare of his constituents. He must have constituents who have benefited from such magnificent organisations as the Spastics Society, the Save the Children Fund, Help the Aged, and Age Concern. Knowing

him, as I do, for a charitable man, I am sure that he has himself subscribed to their efforts and endeavours on more than one occasion. He may even hold office in one of those organisations. If he does, knowing him as I do for his independence of spirit and mind, and even for his voting power on occasion, I cannot imagine that he will support an attack on charities.
10.30 p.m.
That is what we are talking about tonight. We are talking about an attack upon those who give of their time, talents and money to ensure that a little extra degree of individual concern is expressed to those who need that concern, and to ensure that there is proper care within our society. There cannot be true caring where there is total impersonality. There must be a degree of individual involvement, and it is in our charities that we see this.
I was glad that my hon. Friend the Member for Kidderminster (Mr. Bulmer) referred to the Church, because what we are witnessing today—I choose my words with extreme caution and absolute care—is an attack on charities such as has not been witnessed in this country since the dissolution of the monastries. I cannot really imagine that the Chancellor of the Exchequer wishes to pose as the poor man's Henry VIII.

Mr. Jasper More: I hate to interrupt my hon. Friend but I do so purely on a point of accuracy. There was an attack on charities in 1863 by none other than Mr. Gladstone, who decided that all charities must pay income tax. That almost created a revolution in the country. I am glad to see the hon. Member for the Isle of Wight (Mr. Ross) enter the Chamber. Mr. Gladstone eventually saw the light on the road to Damascus and recanted of his sins and laid down as a precept that never again must charities be subject to any form of taxation. That is what makes it so disgraceful that the present Government should have brought in legislation of this kind. I hope that my hon. Friend has not lost the thread of his admirable speech.

Mr. Cormack: How could I with such a splendid, stimulating and entirely pertinent intervention? Indeed, to remind us of Mr. Gladstone in the presence of one of his intellectual successors is a great service to the House.
I merely hope that the Chancellor of the Exchequer, when he is advised of my hon. Friend's intervention, will seek not to emulate Mr. Gladstone but will go one better and expunge from the Bill the vindictive clause which will bring in very little to the national coffers but which means so much to those who, from Bury St. Edmunds to South Worcestershire and Burton-on-Trent, and from Land's End to John O'Groats and London, work day in and day out to serve their fellow men.
I think of the women in the WRVS. I think of those who slave to operate our lifeboats. It is not only the churches, although they are a cause dear and close to my own heart. Throughout the length and breadth of the country there are charities too innumerable to mention.
I am glad to see the hon. Member for Edmonton (Mr. Graham) present when I am talking about charities. The hon. Gentleman, who is a dear friend of mine, will surely know that tomorrow the National Art-Collections Fund has its annual general meeting. That is a cause which is particularly dear to his heart. It is a charity which has perhaps done as much as any other to serve the national heritage. Why should bodies like that, which have operated with great sensitivity and total objectivity, and which up to now have been singled out by this Government for favourbale tax treatment, be attacked by this particular measure?

Mr. David Weitzman: Will the hon. Gentleman please be charitable to all of us and stop his silly meanderings?

Mr. Cormack: I do not think, Mr. Deputy Speaker, that I need seek your protection from interventions of that kind. I can see from the eager faces around me that my hon. Friends are entirely with me and welcome a dissertation on the value of charities. If the hon. and learned Member for Hackney, North and Stoke Newington (Mr. Weitzman) has not the charity to listen, let him have the charity to go outside and buy a friend a drink.

Mr. George Cunningham: I am sorry to introduce a serious note into this vaudeville act, but the hon. Member knows, as do most hon. Members who have spoken in the last 20 minutes while I have been listening, that in private conversation

none of them would make the kind of exaggerated charges that they are making in their speeches. The hon. Member himself would not in private conversation make the kind of charges that he is now making.
Since he is one of the hon. Members, in any part of the House, who cares about the House and the respect in which it is held outside, I suggest to the hon. Member that by exaggerating the case and suggesting that all the virtue is on one side and all the villainy on the other he does no good to the House of Commons, to the case he is making or to charities. Therefore, can we get to the real merits of the marginal case for the proposition, which is a real one, which can be made, and to the marginal case against it, and stop this vaudeville act?

Mr. Cormack: rose—

Mr. Fairbairn: On a point of order, Mr. Deputy Speaker.

Mr. George Cunningham: Talk about vaudeville!

Mr. Fairbairn: Is it proper for an hon. Member to impugn the motives not only of those who have spoken but of those who have yet to speak?

Mr. Deputy Speaker (Mr. Oscar Murton): The latter part of that point of order is purely hypothetical. On the former part, I do not think that the hon. Member's motives were impugned. The exchange was part of the cut and thrust of debate.

Mr. Cunningham: If this place is ever abolished, this is why it will happen.

Mr. Cormack: If anyone is guilty of exaggeration at the moment, it is the hon. Member for Islington, South and Finsbury in the violent nature of his interjections. At no stage in my membership of this House, and certainly not this evening, have I suggested that a monopoly of wisdom and virtue lies on one side. Indeed, in my opening remarks I referred to the invaluable contribution of certain charities which are particularly close to the hearts of Labour Members. I have never suggested, and will never suggest, that the monopoly of virtue lies on one side. Indeed, I was appealing to the good sense, sensitivity and sense of history of Labour Members when I talked about the contributions to social advance and


reform which have been made by charitable individuals who would never in the course of history have allied themselves with my party.
Of course, this is not a one-sided argument. That is why I hope that the Minister will do what he has done before tonight and say that he accepts the argument and that the Government will think again about this process. Whether the wording of the new clause is entirely apposite I do not know. The Government have the resources and the facilities to tell us that.
What the Government can and should accept, and what in charity and good sense they must accept, is the force of the argument of those throughout the country, many of them not members of the Conservative Party—the bishops have been quoted: the Bench of Bishops at the moment is not particularly blue in its complexion—who are concerned to moderate the terrible effects of this measure upon the things they hold dear.
My hon. Friend quoted from a letter from the Bishop of Bristol, who talked in moving terms about the contribution made to our educational system by the voluntary schools. In effect, he asked why all these resources should be given to the State or to local authorities as if they, and only they, knew best how to regulate the education of our children. The voluntary schools contribute enormously to the diversity of the education system and give it depth and wealth. These are not private or independent schools patronised only by the affluent and giving education only to the wealthy. They are ordinary schools which add an extra ingredient to our education.
When the bishop says that the future of those schools will be in total jeopardy if this measure is passed, he is not speaking in a partisan way as a politician of either the Left or the Right. He speaks as a man who knows and who cares deeply. If this House cannot listen to his argument, it is all the poorer.
Although, of course, in the cut and thrust of debate it is perfectly permissable for me or the Minister to exaggerate and score party points, at the end of the day this argument is far more important than any party or any individual. These institutions which contribute more than any others to the wealth and diversity

of our society are being attacked. It is for the Minister to answer that attack. If he can convince us—which I doubt—we will listen.

Mr. Michael Spicer: Would my hon. Friend agree that, contrary to what the hon. Member for Islington, South and Finsbury (Mr. Cunningham) implied, we were saying that it is the ethics and value estimates honourably held by Labour Members which have led them to believe that we should work towards a situation where all benefits are State-controlled and State-operated?

Mr. Cormack: Indeed, that is the point which my hon. Friend made and which I took up earlier. In developing the point I said—and I believe it—that most hon. Gentlemen opposite do not fall into the extreme category of those who truly believe that the State can, shall and must provide. I know from personal knowledge that many of them support charities. Many of them, like the right hon. Member for Huyton, believe that charities have a continuing and valuable—indeed invaluable—rôle in our social structure.
Tonight the Minister is mounting an attack on individuality and voluntary effort, which are among the things that have made our society one of the richest in the world. If we believe in this country, in its value judgment and in the development it has made to social progress throughout the globe, we should say with one voice that we will not allow this measure to pass.

Mr. John Stokes: I rise to support all my colleagues tonight who have appealed to the Government to give some respite to churches and charities from the rigours of this disagreeable and anti-social Bill. One of the glories of England has been its voluntary spirit, which I hope it supported on all sides of the House. The Bill intends to kill that spirit, and in time everyone and everything in this ancient country will have to be beholden to the State.
If the new clause is not passed, we shall be, in effect, passing judgment on our ancestors and all those who lived and died before us and whose tombs we see in the glorious parish churches of our countryside. We must be able to hand on something infinitely precious to our heirs and successors. [Interruption.] I am


interested that Labour Members laugh at our parish churches and their great memorials. That surely is to their everlasting shame.
We see in the opposition to the clause—I address my comment particularly to the Minister, who is a clever young man from Wales—the spite and envy which characterises part of the Labour Party. That part of it hates anything and everything which is not State-supported or State-dominated. The fact that only four Labour Back Benchers are present indicates the interest of the Labour Party in this matter. To kill the clause will be another death blow to freedom. It will be a denial and a betrayal of the great past of this country.

10.45 p.m.

Mr. Lawrence: I canont match the oratory of the two previous speakers and I am, therefore, tempted to take my text from I Corinthians XII, which reads
Charity is to be preferred before all other gifts.
If there is one matter to which the Government should address themselves tonight, it is not purely the matter of charities, but the question of actually being charitable towards the institutions of which my hon. Friends have spoken. Charity is to be preferred also before all gifts from the Welfare State. The text goes on to say "Charity never falleth away", but what the Government intend to do by the Bill is to make sure that charities fall away. Then, the only institution which could come to the assistance of the religious organisations or the needy in our society would be the Welfare State, to which we as taxpayers are finding it increasingly difficult to contribute more of our money.
The clause seeks to prevent harm being done to charities under the Bill. The Government have made some concessions to charities, but it seems to be almost an element of spite to deny charities the full benefits of exemption. I do not understand the Government's attitude. After all, the scope of the Welfare State is obviously limited, and never more so than at this time when the Government are having to borrow £12,000 million to make up the difference between what is raised in taxation and what the Welfare State demands.
We cannot go on spending and spending. The Government will never be in a position to make up for the work which the charities do and which they may not be able to do if the Bill is enacted without the sort of change we now envisage. The charities want only to be left alone to look after themselves. They do not want the State to help or hinder them. After all, what the charities do is for the good of all of us in helping the weak in our society.
Some of the effects of the Bill may well be disastrous to the charities and more generally harmful. Let me give an example. They will not want to give up land which they owned on 12th September 1974 because the Bill favours those which had land before that date and charges for DLT those which have land after that date. Will that be good for the land market?
What we need to do least at the present time, in view of the housing shortage and the land starvation which there must be under this régime, is to dry up the sources of our land. Or is the land to be taken away from the churches or from the charitable institutions in due course, perhaps in 10 years' time when the effects of the Community Land Act come to be implemented?
How can the charitable organisations adapt themselves to the new needs of a changing society if they are discouraged from selling their land? Suppose that they wish to sell land in an area where people are moving out and want to acquire land in an area where the population is growing, so that money can be gained from the ownership of land in, say, busy shopping centres to be put to good charitable uses. Under the Bill, they will have to pay development land tax and they will thus be deterred from undertaking that purchase and sale of land.
In these times, the rate of inflation is almost unbearable to all sections of society, and it reflects itself in the costs and expenses of charities. In this time of all times, it is important that the charities should be able to protect their income where large proportions of it are available from the purchase and the sale of land which is less susceptible to inflationary pressures than other commodities are.
I should like to give a second example of the effect that the Bill will have. Suppose that land which is purchased after 12th September 1974 becomes unsuitable in some way to the charity which bought it because it is no longer large enough for the purpose for which it was intended, or that has in some shape or form a defect which no longer makes it acceptable to the charity. Is that land to be sold subject to tax liability while any new land that the charity has to buy is to be acquired at market value, at inflated rates? Is this the sort of effect that the Government seriously mean to have upon charities at the present time?
I have only to quote one sentence from the Churches Main Committee on this point:
The result over the long term must therefore tend to ossify the work of the Churches and charities and make them less responsible to new needs.
I accept that Labour Members—many of whom subscribe to and many of whom, when they are away from this place, work for charities—appreciate more than many other people the need for the charities to remain financially viable. If that is the sort of observation which can legitimately be made by the Churches Main Committee, surely it must cause the Government to think again about this part of their legislation.
Land ownership and the freedom to buy and sell land for a profit are the only protection that the churches and other charities have against inflation. When the charities have gone—because they can no longer afford to maintain the services which they have provided over the years, since they will no longer have any resources and can no longer sell their land in order to bring in money—will the Government then be able to look after the interests of the religious denominations, the sick, the old and the needy in our society who do not at present depend to any substantial degree upon the Welfare State? Will the Government be able to increase their borrowing requirement to subsidise the charities and to take them under State control? Will the present or any Government ever be able to make up for the work done by so many of these wonderful organisations?
Why does the Labour Party allow itself so repeatedly to be seen as the enemy of

the churches and to be the organisation which undermines that part of the fabric of our society? I know that there are sincere and deep supporters of religions on the Labour side of the House. Why do they allow the Government to be seen to be the organisation of the attack on the traditions of the churches and their work? Why do the Government, who as Labour Party representatives have always boasted of their concern for the old, the needy and the sick, allow themselves to be put in a position where we can say that they are being, in effect, the enemy of all the good work that these organisations do?
Why does the Labour Party allow itself to be put in the position of being the enemy of all private enterprise even when it is devoted to social ideals? Why does it allow itself to be put in a position where we can say that it behaves as if it hated the sight of charities and other organisations set up only for social welfare? Why? What is to be gained? Is this the attitude which the trade unions want? Are they asking Labour Members to undermine the financial viability of charities, churches and other social organisations? I doubt it. Are Labour Party candidate selection committees asking them to do this? I doubt it. Is it thought that people in the country who put the Labour Party in power want them to undermine all these institutions in this way? For goodness sake, I ask Labour Members to think again.
If money is no longer available for charities from taxation, it has to come, if need be, from the sale of some of their land assets. I remind the Government and their supporters, because it seems to be slipping from the recollection, that individuals can no longer afford to give as high a proportion of their income to charity as they used to do.
If one looks down the list of countries which trade with us—Belgium, Denmark, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Sweden, the United States, Canada and Japan—one finds that in only one other country do people start paying income tax at a lower threshold than we do, and that is Sweden. If one looks down the list of those countries and asks at what rate income tax is first paid, one finds that no other country starts paying at 35 per cent and that Sweden starts paying at 7 per cent. If


one looks down the list to see the maximum rate of income tax, one finds that no other country has a maximum rate at anything like the 83 per cent. which we pay.
When one bears these factors in mind—and if they have frequently to be rammed down the throats of Labour Members, we must do that—it must be obvious to the Government that charities will no longer be able to receive the sort of income from working people that they have had in the past. Therefore, when we have had a brilliantly devised new clause like this one, reasonable in all its requirements and, as far as I can see, excellently drafted, I hope that hon Members will look at their attitude afresh.
I started by referring to Corinthians and I return to it.
And now there remain faith, hope and charity, these three: but the greatest of these is charity.
I am afraid that the Government have given me little reason for faith in any of the policies they have introduced. I live in hope that perhaps they may change some where they impinge on the needy and weak of whom they so frequently claim to be the champions. Charity, however, is something that the Government could easily give by accepting the new clause. In the name of charity and charities, I beseech them to accept the clause.

11 p.m.

Mr. John Page: Under your dignified and benign chairmanship, Mr. Deputy Speaker, it has become the fashion tonight that a text should be given before one starts one's speech.
I wish to take as my text a quotation from the Official Report:
I do not regard it as my responsibility, nor do I want to undertake the task, to judge between the relative social merits of any of these charities. Therefore, it is a case of all in or all out, as far as I can see, with all the implications that flow from that"—[Official Report, 25th May 1966; Vol. 729, c. 655.]
That was part of a speech made by the present Prime Minister when he was Chancellor of the Exchequer, shortly before his translation to Home Secretary. He had been making the important point that all charities should be treated in the same way for tax purposes.
I wish to draw attention to the position of voluntary and charitable housing associations, whose business includes the buying and selling of land and the building and converting of houses and flats. All my hon. Friends who have taken part in the debate have spoken with the authority of a deep knowledge of the subject. I speak in an inquiring manner to attempt to clarify the position of housing associations in relation to the new clause.
For the past 25 years, I have been on the committee of a housing association in the East End of London which provides homes of a quality which is both necessary and demanded by those who live in the properties. We shall be making decisions on the purchase of plots of land in the East End which could be used for development.
I understand that property held by that organisation, which is registered as a charity, could be sold without liability to the new tax if the land was held before 12th September 1974. But what about land purchased by charitable housing associations after that date?
Suppose that we had bought an old vicarage or a parish hall in Bethnal Green after that date with the intention of building flatlets on part of it and selling the rest at a profit for shops or a garage in order to pay for the development. That is almost a specific example. To my knowledge it has happened on at least three occasions to a smallish London voluntary housing association during the past 10 years. It will obviously happen in future.
In the larger cities especially, where new developments need to be undertaken by voluntary organisations because they cannot possibly be effective from the point of view of a profit-making company, is it the fact that the associations will be charged the new tax on any land that is sold, whereas a trade union might buy a Reynolds or a Picasso, sell it a few years later and not have to pay capital gains tax on the £100,000 or so that it might make out of the sale? If the Minister tells me that I am wrong in the analogy I have given about the Picasso, I hope he will excuse me and not let that spoil the rest of my argument, which is especially serious.
That leads me back to the quotation from the present Prime Minister in 1966 that a charity is a charity is a charity. I suggest that, merely because by its very nature, a charity does not have to deal in land, it should not be treated differently and less advantageously than a charity that can dabble in land or any other investment that it wishes to make. On that basis, I hope that charity, mercy and equity will be considered by the Minister and that he will accept the new clause, which is marginal in its effect on Government policy but of major importance to a small but valuable group of organisations in our community.

Mr. Russell Fairgrieve: I add my voice to those who are asking for the acceptance of the clause, and particulary to those who reside in Scotland, where for many years and many generations we have had a succession of charities doing great work. Some of them have been mentioned already, but I shall refer to some again.
The Society for the Prevention of Cruelty to Children and the Society for the Prevention of Cruelty to Animals have done wonderful work in Scotland throughout the years. We have the women's rural institutes and the charitable work for the lifeboats, especially on our Scottish coasts, where there are possibly more calls upon that valuable and charitable service than in other parts of the United Kingdom. We have the work for the crippled and the aged and the work of Shelter, one of our housing associations. We have meals on wheels and, notwithstanding the churches, we have the special Scottish housing associations.
In the Bill all charities are being attacked. Throughout the year, and particularly at certain times of the year, we get more and more moving appeals from the charities explaining the severe difficulties they are up against because of falling income. When we read these letters—hon. Members on both sides of the Chamber receive them—and when we give to charities, we are giving out of taxed income. That is not always taken into account. Why do Members, on both sides of the House do this? It is because of a continual distrust of the State. They feel that they wish to take an individual interest in something because the State might not be so concerned because of its monolithic outlook.
What happens? If people show enterprise, it is frowned upon. If they show initiative in choosing one charity and not another, that is against the precept of a Socialist State.

Mr. George Cunningham: Rubbish.

Mr. Fairgrieve: Choice must be taken away. The men in Whitehall, the Government, know best. We are killing the interest that individuals take in charities by being prepared to join charitable boards and to give of their time and money. Again, we are seeing the usual thing that we see continually from this Government—Socialism in action: distrust of the people and the wish to bring some monolithic answer to all our problems.

Mr. George Cunningham: Am I right in recalling that until quite recently the Conservative Party in the House of Commons relied exclusively upon the voluntary financial contributions made by people to provide for research and that kind of thing, but that it has now decided that it is prepared to accept £150,000 of public money out of the taxpayers' pockets for doing the job that had previously been done by voluntary contributions? If I am right in recalling that, does it not show that the Conservative Party also sees the need for State intervention for useful purposes alongside the operation of voluntary contributions?

Mr. Fairgrieve: I do not see the relevance of that intervention. But as the hon. Gentleman has made interventions in each of my last three speeches in the House, I assume that he must have some interest in them.
However, that brings out something we know—that is, that while Labour Members continue to concern themselves only with the distribution of wealth, not being in the least bit interested in its creation, they will run into the type of problems into which the Bill is running. Regrettably, this is again further evidence of Socialism in action. We are seeing here the hard, cruel bureaucratic face of Socialism.

Mr. George Cunningham: £150,000.

Mr. Eldon Griffiths (Bury St. Edmunds): Unlike some of my hon. Friends, I do not believe that the Labour Party wants to grind the faces of the


charities any more than it wanted to bring about a vast increase in unemployment or the cutting back by local authorities all over the country of help for spastic children or for the elderly. I do not for one moment believe that hon. Gentlemen opposite wanted to produce those results. Their difficulty is that their Government, their philosophy and their logic push them into this kind of trap and they do not know how to get out of it.
The new clause gives many Labour Members an opportunity, without putting their Government at risk, of putting their consciences first and of doing something that they know to be right. Indeed, I suspect that one reason why the Government Benches are so empty is that many hon. Gentlemen know full well that what they will be voting for tonight is indefensible. Nevertheless, they will do it because they have got hooked by their Government and they do not know how to get off the hook.
The tragedy of Socialism is that so often it starts with the best of intentions and the highest of ideals, but when it comes to practise what it preaches it gets caught up in political theories and legalistic structures. Week after week hon. Gentlemen opposite find themselves plodding through the Division Lobby supporting policies with which, as human beings, they fundamentally do not agree. Tonight they have an opportunity to show themselves to be men.
11.15 p.m.
I make this plea at the beginning because when I first came to the House, perhaps before I had grown disillusioned. I listened to a debate on the distribution to the Jewish victims of the concentration camps of money provided by the Government of the Federal Republic of Germany. My right hon. Friend who is now Lord Home, the man whom I most admire. had the unenviable task of asking his party to do what many of its members believed to be wrong. I had been here for so short a time in the early 1960s that I voted the way that I believed. The following morning I was invited to see the then Government Chief Whip. I was advised that that was not the way in which new by-election victors were supposed to operate in the

House of Commons. But as a consequence of the fact that I, the most junior Member of Parliament at that time, and a number of my hon. Friends—some of whom are now on the Front Bench—voted in accordance with our consciences, the Government changed their mind. They altered the clause. We achieved what we knew to be right.
Members of the Labour Party—I wish that there were more of them present—know that they would stop the Minister cold on this clause. They know that just a handful of them need only say to their Chief Whip that the Parliamentary Labour Party—the friends of the poor and the homeless—will not accept this attack on charities. The Government Chief Whip would have no alternative but to explain to the Treasury Bench that it would be wise for the Minister of State, when he replies, to make the usual noises that Governments make about sticking to a principle but then to concede the point. Hon. Gentlemen opposite know that if they wished they could tonight preserve those charities which most of them, I suspect, in their constituencies and local newspapers maintain that they support. If they do not do so they will lack courage, they will be total humbugs.

Mr. George Cunningham: The hon. Gentleman says that if Labour Members did not take a certain line they would be humbugs or would lack courage. There is a third possibility—namely, that we disagree with the arguments advanced by the Opposition. The hon. Gentleman well knows that there have been occasions when Labour Members have rebelled and forced their Front Bench to do this nr that. Therefore, will the hon. Gentleman refrain from exaggerating his case?

Mr. Griffiths: Perhaps the hon. Gentleman had not observed that I had not come to my case. I was dealing with the tactical position in which hon. Gentlemen find themselves. However, at the invitation of the hon. Gentleman I come to my case.
The Government's objections to the new clause arise from a point of philosophy. They stem from the view of Ministers, if not of the whole of the Labour Party, that in matters of charity, as indeed in everything else, it is the State that should be mainly responsible. The Opposition take the view that the


State unquestionably has a rôle to play in aiding the poor and homeless but that many activities are better undertaken by individuals—and even better by voluntary bodies. That is the essential difference in our philosophy.

Mr. George Cunningham: In that case, why did the Conservative Party take £150,000 of taxpayers' money? Why did they do that if they believe that these matters are better covered by voluntary contributions?

Mr. Griffiths: One could almost say that it was stuffed down our throats by the Labour Party, but that would not be correct. If the hon. Gentleman wishes to make a contribution to the debate, why does he not have the guts to stand up and be called by the Chair?

Mr. George Cunningham: It does not need any guts.

Mr. Griffiths: The Minister might be interested in this context to hear about an occasion of which I can speak from my own experience. When the Conservative Government were in power, we had the difficult task of accepting into this country a large number of Ugandan Asians. That was one of the most difficult decisions for any Government to have to take. At that time it fell to me, among others, to organise a large number of reception camps throughout the country for 25,000 Ugandan Asians who arrived here in a most desperate plight. It fell to the Government to make the main arrangements and to the local authorities to undertake much of the work. I want the Minister to accept that although the Government took he lead, it was the voluntary bodies that carried out much of the job.
In camp after camp that I visited, I found that it was the Churches, the women of the WRVS, the Red Cross, the women's institutes, Age Concern, the YMCA and others who did the job and who counted. Although the State and the local authorities provided the backing, it was the voluntary people of our country who rallied round and undertook the job in the hour of need.
Those are the very people who will be struck at by this mean and nasty Bill. They are the people who would be helped by the new clause. The willingness of our people to serve voluntarily

is one of our greatest national assets. If the day should come—and it may be upon us soon—when those who serve become disillusioned and feel that the State system is stacked against them and that the State will do it all, our nation will be very much the poorer. The Minister should think long and hard before he destroys the ability and the willingness of that group of people, of all parties and of all religious persuasions, to respond to need in a charitable way.
There is also the other side of the coin. It is not only people who work for the charities, the salt of our population, those who are assisted by the charities, whom the Bill will damage. I am thinking, for example, of the people who are helped by the Salvation Army. These unfortunates are very often the ones we do not like to think about—the incontinent wayfarers and the impoverished tramps who are to be found in hostels in various parts of London. Then there are also the spastics, who above all people deserve our help, and the mentally and physically handicapped. The sort of help that no State can give is something called kindness, those little unremembered acts of kindness and love performed by individuals. The hon. Member for Manchester, Wythenshawe (Mr. Morris), who is the Under-Secretary of State for Health and Social Security with responsibility for the disabled and who is now in the Chamber, will be the first to agree because he has done much for the handicapped.
I underline my argument with an illustration. I have occasionally gone round wiht the meals-on-wheels organisation, which is sometimes is said to have a "Mum's Army" imagine. But as one travels round with the women taking meals to the elderly, the incontinent, the housebound and the handicapped, one cannot but be touched by what they do. I remember an elderly woman in her eighties, who was twisted, poor and nearly blind. She told me what a difference there was between the days when the council delivered her meals and those when they were brought to her by the women who had got together on a voluntary basis. I make no attack on the council. But those who work for councils generally regard their work as a job. They get round the houses as quickly as they can. By contrast, the volunteer provides the personal touch, the piece of fish that has been cooked a little longer, the individual


contact which can and does come from the volunteer, but only rarely from employees.
The Minister should be careful that, in addition to damaging the spirit of those who serve and work for our charities, he does not take away from the people who receive benefit from charity those little touches of kindness that only the volunteer can give.
I turn now to other areas that are to be damaged. I used to have some responsibility for sport. Again and again I found that public funds for swimming pools or a stadium or any of the many other needs of healthy and active youth could not be made available even though the Government, in which I had the responsibility in real terms, provided perhaps eight times that which is being provided now. But since local Government and the State could not encompass the sporting needs of our youngsters we encouraged, as a matter of policy, the voluntary, private, charitable bodies to come to the aid of sport.
An illustration is the Sobell Sports Centre in Islington, set up by a man who grew up as a poor boy in the East End of London, did well and made his millions. He wanted to put back into the pot more than he had taken out, and the sports centre is the result. It is a charity arising from the action of a man who might well have invested in land. Across the whole range of sport and recreation, the voluntary bodies and charities provide that for which the State does not have the resources.

Mr. George Cunningham: I am sorry to intervene again, but it is necessary to say that the future of that institution has had to be the subject of intervention by the local council because the other sources of funds were not sufficient to keep it going. That is not, therefore, a good illustration of the argument by the hon. Member for Bury St. Edmunds (Mr. Griffiths).

11.30 p.m.

Mr. Griffiths: I am sorry that the hon. Member for Islington, South and Finsbury (Mr. Cunningham) does not appreciate the inflation which his Government have set loose. The £1 million originally provided in the trust of the Sobell Sports Centre came from a charity.

Much of that money may well have been invested in land. If the Bill goes through without the new clause, the hon. Member can say goodbye to any more bequests of that kind.
Charities and voluntary bodies have also made a massive contribution to the environment. I remember presenting, on behalf of the United Kingdom, at the United Nations Conference on the Environment in Stockholm a book which displayed the English countryside as an example not of State planning but of that combination of public and private activity that has made our landscape one of the treasures of the world.
A great deal of our cultural landscape arises from the charitable foundations that have ornamented our history. I think of some of the parks and houses, and above all of many of our parish churches, which are among England's glories. The ability of church after church to maintain its tower and gardens and its beauty could be severely damaged by this nasty Bill.
I turn to a point raised by my hon. Friend the Member for Worcestershire, South (Mr. Spicer) in his admirable speech. He asked the basic question whether charity was incompatible with Socialism. I said at the beginning of my speech that I did not believe that Labour Members personally wanted to put through this squalid Bill. My hon. Friend put his finger on the point. The problem for Socialists about charity is its diversity. Charity is something that proceeds not from one place but from many. It is the activity of tens of thousands of diverse organisations and individuals, all helping different people and taking different attitudes. The philosophy behind the Bill is not diversity but monopoly. That is a fundamental reason why my hon. Friend the Member for City of Chester (Mr. Morrison) is right in discovering an incompatibility between the Socialist Party and charity.
Charity also means independence, the independence of people from total reliance upon the State. That, too, is incompatible with a fundamental tenet of Socialism. Charity also means self-help, which the Labour Party also finds deeply offensive.
Our new clause would give Labour Members the opportunity to stop the


Government in their tracks without bringing them down. They owe their consciences and their constituents the courage to do so. If the clause is accepted it will not save all the charities in Britain, because they are already the victims of inflation, but it will enable the survival of the spirit of charity, the willingness of hundreds of thousands of our fellow citizens to work for others for nothing but the joy. The clause would also help the environment and sport, but above all it would help the weakest and poorest members of our community, those for whom the Labour Party maintains that it has the deepest compassion.
I commend this well-drafted clause. If the Minister accepts it he will not put the Government at risk. He will be accepting what a majority of hon. Members on both sides of the House believe, deep down, that the Bill is wrong on this point. If he has the courage to recognise that, he will not damage his career. He will demonstrate that he is a man of sensitivity and compassion, and he will do something right for his country.

Mr. Fairbairn: Following upon that lucid and impassioned speech, I hope that I shall not offend against the principle which the hon. Member for Islington, South and Finsbury (Mr. Cunningham), a Scotsman sitting for a very English seat—

Mr. Cormack: A very Irish seat.

Mr. Fairbairn: —has so freqeuntly passed upon us that we should not exaggerate our case. For a Scotsman who sits for an English seat, he shows all the meanness that a Scotsman out of his own country can show.
However, it is important to realise that what we are debating is two clauses—and a relief of them—which merely have the effect that they will suddenly cut off from charities a source of their income. That is what has to be realised. Suddenly there is to be a change.
I should have thought that the proper definition of a charity was essentially an organisation which merely raises its funds and spends them on the purposes for which it exists, without profit. It does it for the very quintessence of its own intentions, be it the Salvation Army, the

local church or anything else. It is interested in fulfilling its obligations. It is not interested in the terrible thing of profits—which Labour Members find so offensive, but so necessary, and which they spend so constantly.

Mr. Cormack: They spend other people's profits.

Mr. Fairbairn: It matters not whose profits they spend. The never make them. They lose them. However, I should have thought that it could be generally agreed among us that a charity, whatever it is, is an organisation which raises funds and spends them on a purpose which all of us would agree is good, whether it be the prevention of cruelty to animals or to children, the salvation of refugees, for spastics or for whatever reason, or for the worship of whatever deity one person or another holds to be worshipful.
Accepting that the purpose of Clauses 24 and 25—without amendment effected—is to deny to those organisations a major source and a major derivation not only of the income they will have in the future but which they had planned in the past, it means simply that if a church is to move, as churches frequently will have to move, from the centre of a town to the periphery, that will be all right provided it is church for church. However, if the church says "We are a congregation that can no longer afford to keep a church or to have a church in such and such a suburb", and if it therefore says "We happen to own the corner of Oxford Street or the corner of Langham Place"—where there is a church—" and we shall erect on that something that will give us the income which will enable us to preach in the parish of Islington" that will be forbidden.
That is the scandal of this legislation. We are forbidding to the charities the right to use their best way to get the largest income in order to do the work we all believe they should be doing. That has never before been the law of this country. I do not believe that it is the Labour Party's intention that it should be the law.
As the Minister will know—and there is no more compassionate man—I do not believe that he is in sympathy with that concept. This is a had Bill which


has been drafted by innumerable different Departments. I do not believe that the people who are advising the Minister understand what the separate clauses mean. I believe that logic—that terrible thing of blocking up loopholes; logic, the art of going wrong with confidence, which has constantly been the guiding light of this Government and their Ministers—compels them to ensure that nobody will get out of the filthy trap they have laid for us all. Therefore, it would be evil if the charities were to be exempt.
It would be offensive, would it not, if the Church of England, the RSPCA or the Salvation Army were to let part of their premises to a shop or for development in order to fulfil their financial commitments to the people in whose service they were in operation? That would be offensive, and the Government would have to take away from those wretched organisations the power to serve those in whose interests they were in being.
The Minister told us of his views, and they were very touching. But they were totally irrelevant. He told us during Committee that the Government were not discriminating against charities in this legislation. He added:
I do not think I need to say more. We have dealt fairly with charities. I cannot accept this extension because it would create a two-tier market.
Therefore, it would be horrid if those naughty charities were to be treated differently from the industries which are partly exempted and commerce which is not. That is a two-tier market, but it does not matter there.
The Minister added in Committee:
Charities would be free to invest in land at no taxation liability".—[Official Report, Standing Committee J, 12th May 1976; c. 1139.]
Would it not be awful if those who are doing their best to serve their community out of their resources, and making no profit for its own sake, were actually to be exempted from the beloved concept of tax? That is what this is all about.
The Government need not enter into the concept that unless everyone is taxed there is unfairness. These are organisations which provide, at one-hundredth the cost, the same services as the Gov-

ernment could provide. If the Government seriously believe that their proposals will do good either to the Inland Revenue or to the community, they are mistaken. They are embarking again on a bad road, for a bad reason, and I regret to say that, even worse, those hon. Members who support them, who pretend sympathy for those who are weak, poor and feeble, will vote with the Government in order to keep their own beastly consciences.

Mr. Graham Page: These two new clauses deal with charities which need land, and rely on the value of that land, for carrying out their charitable services. That perhaps does not cover all charities, but it is extraordinary how many it covers. Ordinary charities, such as the Salvation Army or the YMCA, not only the churches and the colleges but many of the far more modest charities, rely on the ownership of property and the enhancement of the value of that property in order to carry out their charitable work.
That is recognised in the Bill. It is recognised by giving to charities certain relief, a narrow relief, in respect of land held by charities on White Paper day, 12th September 1974. The relief would be on land which charities hold and wish to develop for their own purposes. They would not then be charged on the deemed disposal. In a very narrow way, therefore, the Government have recognised that there should be some small relief for charities.
11.45 p.m.
The new clause would provide charities with relief from the tax on a roll-over basis. It would not give them complete relief but it would give them some reasonable relief for using the charitable money on which they depend to carry out their services, to roll it over into new enterprises or the improvement of their assets, so that they can perform their functions the better.
My hon. Friends have perhaps not noticed that we are discussing at the same time New Clause 8, which would simply provide that DLT in this respect should be 10 per cent. and not 80 per cent. I freely admit that this was a device to get another debate on charities on Report after we had had a full debate


on them in Committee. I should have preferred a simple clause to say that charities should not pay the tax at all.
How on earth did the Government get the idea of charging charities with this tax? It is a miserable tax anyway, but what will be gained by charging charities? All that will be achieved is a break with the tradition which Parliament has observed for centuries of recognising that charities do a great service and of not taxing them.
The whole basis of the tax is that the money should be taken from those who make a profit out of land and given back to those who provide a service for the community. Are not the Churches and colleges and other charities at least as important in the service they render to the community as the Highlands and Islands Development Board, the Letchworth Garden City Development Corporation and the Scottish Special Housing Association? Do they not deserve the complete relief which is given to those bodies among others?
Although I support the roll-over clause completely, I should prefer charities to be completely free of the tax. This is the first time that such a tax has been imposed on charities. They have been free of development gains tax and capital gains tax. They have never been viewed as a source of income for the Exchequer. How did the Government identify the need to tax charities by this means?
I think the Government will find that their supporters are utterly ashamed of the fact that they ever brought in this tax against charities. I hope that even at this late moment the Government will see sense and not only accept New Clause 4 but also say that, on second thoughts. they will relieve charities altogether of development land tax.

Mr. Denzil Davies: It would be trite to say that we have had a far-reaching debate. Opposition Members, with characteristic understatement, have deployed their case subtly, giving large numbers of cases in which charities will be affected, from meals on wheels to the Child Poverty Action Group. They have claimed that charities which make a profit out of land development will be destroyed completely by the legislation. That is the general tenor of the speeches we have

heard tonight. Perhaps I can bring the debate down to its lower level by saying that the Opposition have spoiled their case by overstating it and exaggerating it. The hon. Member for Staffordshire, South-West (Mr. Cormack) was a prime example of this.

Mr. Cormack: Will not the Minister admit that in the future it is perfectly possible that people who are charitably disposed might give land to charities? Does he not realise that this is one way in which a person who wishes to leave a bequest to a charity can do so?

Mr. Davies: If a gift of land is made to a charity, it is not affected by this legislation.
There are a minority of charities—the churches and perhaps one or two others—which own land with development value. But they are a minority—an important minority, but nevertheless a minority. Most charities, including the ones which have been mentioned tonight, such as meals on wheels, the Child Poverty Action Group, the Save the Children Fund and Oxfam, are not so fortunate as to own prime sites in the middle of cities which they want to sell and make a development profit.
We are concerned mainly with churches which want to move their operations and activities from the inner city into the suburbs. To meet that particular problem we introduced various deferments and exemptions to the legislation. The first such exemption is on land owned by a charity on 12th September 1974. That is completely exempt from the effects of the legislation. This covers 98 per cent. of land owned by charities.
If a church, for example, in an inner city area disposes of land which it acquired before 12th September 1974 in order to follow the population into the suburbs because of decay in the inner city, and if it makes a development profit, which is reinvested in new land in the suburbs to build a new church, that case is completely exempt. There is no tax in respect of that land. I concede entirely that if. in 10, 15, or 20 years' time, when the suburbs have decayed, or have themselves become inner cities, the church wants to move again and once more it makes a development profit, that particular sale will be taxed.
As the Bishop of Bristol said, however, this is a long-term problem. All the representations we have had from the churches have recognised that fact.

Mr. Fairbairn: I think that the Minister is overlooking the fact that, just as trade unions and other organisations have done, charities may have invested in land in order to obtain an income and capital improvement. It has nothing to do with the fact that a church or cathedral happens to have to move. This is a matter of investment. If the ministers move their investment, how are they to keep their land?

Mr. Davies: If the land was owned by the charity before 12th September 1974, there is no problem. If it was acquired after that date, a betterment profit would be taxed. I would not have thought that that was entirely a bad thing.

Mr. Stephen Ross: The Minister is saying that if the land is owned by the charity before the relevant date it will not be taxed. Under the Community Land Act, charities have about 10 years' exemption. After that, they are liable to have their land acquired by the local authority. That means that the asset will not remain with them after 10 years.

Mr. Davies: The tax is transitional in the sense that once the appointed day has been set under the Community Land Act we enter a different regime. Under these provisions, however, and in the short and medium term, I submit to the House that there is no problem. In the long term there might be a problem, although charities would take into account the change in legislation to conform with the present arrangements.
The other point that has been made concerned the village church or school. Where a charity develops land for its own use to rebuild the school or church—and "own use" is narrowly defined in the legislation, so that we are concerned with operational land and not land for investment—there is no question of any tax being imposed. Hon. Members have exaggerated when they have tried to suggest that village schools or churches will be destroyed under the Bill. That is complete and utter nonsense.
Finally, we must come to the main point. The hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) said that when a charity makes a profit it has done something good but that we are proposing to tax it. We are concerned with a betterment profit in the sense that it arises because of the granting of planning permission. It is not a profit which arises as a result of a prudent investment. It arises as a result perhaps of a lucky investment in the sense that the body concerned happens to own land which falls on one side of a line and that enables it to receive planning permission. This is not a matter of the charity working hard to make a profit. The profit is purely fortuitous and arises through the action of the local authority, not through the prudence of the charity.

Mr. Fairbairn: I was careful to say that the definition of a charity was that it did not make a profit. If it makes an investment with the intention of increasing its funds, it is not making a profit but is merely enlarging its capacity to do its duty.

Mr. Davies: That is another definition of profit. I would not have thought it was worth getting involved in semantic arguments of that kind. If a charity buys land for £5,000 and by some act of a local authority that land becomes worth £100,000, the £95,000 gain looks to me very much like some kind of profit. My point is that it is not wrong for the charity to make that profit but that it is not the result of prudent investment. It is the result of community action and local government action and has nothing to do with the charity at all.

12 midnight.

Mr. Ridley: When a charity has a premium bond win or organises a church raffle which brings in some money—both of which gains are fortuitous and not the result of hard work—are the Government proposing to tax those?

Mr. Davies: Hon. Gentlemen should not argue from the particular to the general in every case. I was not saying that because a gain was fortuitous it would necessarily be taxed. The point is that we are not depriving a charity of its hard-won profit or gain. We are merely saying that here is a gain arising largely


as a result of community action and that most of that gain should be returned to the community, not to the State, through the local authority.

Mr. Kenneth Lewis: The Chancellor of the Exchequer, under capital transfer tax, has allowed charities to receive gifts from people of up to £50,000 so that charities may continue to exist. In some cases land may be donated to a charity. Is not the Minister contradicting what his own Chancellor of the Exchequer is doing by taking away, with this development land tax, what the Chancellor of the Exchequer is trying to concede?

Mr. Davies: No. It shows again that we are very sympathetic to the needs of charities and that we recognise that people make gifts of land to charities. My right hon. Friend has recognised it in the Resolution giving the appropriate exemption. The gift will not be subject to development land tax. We are concerned only with a situation where a gain or profit is made by the charity as a result of the granting by a local authority of planning permission.

Mr. Nicholas Winterton: Where will the money go if it does not go back to the community? Will not money which goes back to the community through a charity be much more effective in every possible way than money which goes through the Government and costs so much to administer?

Mr. Davies: We are talking about elected local authorities, many of them controlled by the Conservative Party, with worthy councillors. Sometimes the money will be used more effectively and sometimes not. I accept that entirely. I am sorry that hon. Gentlemen have so little sympathy and regard for local authorities and would not wish to see these gains returned to the community.
I do not want to pursue the argument. There is a great gulf between this side of the House and Opposition Members. Hon. Gentlemen have spoilt their case by exaggerating it. They have done their case great injustice. I have accepted that in the length term there may well be a problem. I accepted that in Committee. No doubt these matters will be looked at again, but at the moment there is no problem.
Charities are fully protected. We have given them a substantial concession, and in most cases the legislation will not affect charities at all. We are concerned with an important minority of charities which will not be affected in the immediate future, and we believe that at the end of the day the right way to deal with the problem is as we propose and that the right people to have the betterment profit are the community.

Question put, That the clause be read a Second time:—

The House divided: Ayes, 271; Noes, 276.

Division No. 191.]
AYES
[12.5 a.m


Adley, Robert
Bulmer, Esmond
Dunlop, John


Aitken, Jonathan
Burden, F. A.
Durant, Tony


Alison, Michael
Butler, Adam (Bosworth)
Dykes, Hugh


Arnold, Tom
Carlisle, Mark
Edwards, Nicholas (Pembroke)


Atkins, Rt Hon H. (Spelthorne)
Carson, John
Elliott, Sir William


Baker, Kenneth
Chalker, Mrs Lynda
Emery, Peter


Banks, Robert
Channon, Paul
Ewing, Mrs Winifred (Moray)


Bell, Ronald
Churchill, W. S.
Eyre, Reginald


Bennett, Dr Reginald (Fareham)
Clark, Alan (Plymouth, Sutton)
Fairbairn, Nicholas


Benyon, W.
Clark, William (Croydon S)
Fairgrieve, Russell


Berry, Hon Anthony
Clarke, Kenneth (Rushcliffe)
Farr, John


Biffen, John
Clegg, Walter
Fell, Anthony


Biggs-Davison, John
Cockcroft, John
Fisher, Sir Nigel


Blaker, Peter
Cooke, Robert (Bristol W)
Fletcher, Alex (Edinburgh N)


Body, Richard
Cope, John
Fletcher-Cooke, Charles


Boscawen, Hon Robert
Cordle, John H.
Fookes, Miss Janet


Bottomley, Peter
Cormack, Patrick
Forman, Nigel


Bowden, A. (Brighton, Kemptown)
Corrie, John
Fox, Marcus


Boyson, Dr Rhodes (Brent)
Crawford, Douglas
Fraser, Rt Hon H. (Stafford &amp; St)


Bradford, Rev Robert
Critchley, Julian
Fry, Peter


Braine, Sir Bernard
Crouch, David
Galbraith, Hon. T. G. D.


Brittan, Leon
Crowder, F. P.
Gardiner, George (Reigate)


Brocklebank-Fowler, C.
Davies, Rt Hon J. (Knutsford)
Gardner, Edward (S Fylde)


Brotherton, Michael
Dean, Paul (N Somerset)
Gilmour, Rt Hon Ian (Chesham)


Bryan, Sir Paul
Dodsworth, Geoffrey
Gilmour, Sir John (East Fife)


Buchanan-Smith, Alick
Douglas-Hamilton, Lord James
Glyn, Dr Alan


Buck, Antony
Drayson, Burnaby
Godber, Rt Hon Joseph


Budgen, Nick
du Cann, Rt Hon Edward
Goodhart, Philip




Goodhew, Victor
Macmillan, Rt Hon M. (Farnham)
Rossi, Hugh (Hornsey)


Goodlad, Alastair
McNair-Wilson, M. (Newbury)
Rost, Peter (SE Derbyshire)


Gow, Ian (Eastbourne)
McNair-Wilson, P. (New Forest)
Royle, Sir Anthony


Gower, Sir Raymond (Barry)
Madel, David
Sainsbury, Tim


Grant, Anthony (Harrow C)
Marshall, Michael (Arundel)
St. John-Stevas, Norman


Gray, Hamish
Marten, Neil
Scott, Nicholas


Griffiths, Eldon
Mates, Michael
Scott-Hopkins, James


Grist, Ian
Mather, Carol
Shaw, Giles (Pudsey)


Grylls, Michael
Mawby, Ray
Shelton, William (Streatham)


Hall, Sir John
Maxwell-Hyslop, Robin
Shepherd, Colin


Hall-Davis, A. G. F.
Mayhew, Patrick
Shersby, Michael


Hamilton, Michael (Salisbury)
Meyer, Sir Anthony
Silvester, Fred


Hampson, Dr Keith
Miller, Hal (Bromsgrove)
Sims, Roger


Hannam, John
Mills, Peter
Sinclair, Sir George


Harvie Anderson, Rt Hon Miss
Miscampbell, Norman
Skeet, T. H. H.


Hastings, Stephen
Mitchell, David (Basingstoke)
Smith, Cyril (Rochdale)


Havers, Sir Michael
Moate, Roger
Smith, Dudley (Warwick)


Hawkins, Paul
Molyneaux, James
Speed, Keith


Hayhoe, Barney
Monro, Hector
Spence, John


Heseltine, Michael
Montgomery, Fergus
Spicer, Jim (W Dorset)


Hicks, Robert
Moore, John (Croydon C)
Spicer, Michael (S Worcester)


Higgins, Terence L.
More, Jasper (Ludlow)
Sproat, Iain


Holland, Philip
Morgan, Geraint
Stainton, Keith


Hooson, Emlyn
Morgan-Giles, Rear-Admiral
Stanbrook, Ivor


Hordern, Peter
Morris, Michael (Northampton S)
Stanley, John


Howe, Rt Hon Sir Geoffrey
Morrison, Hon Peter (Chester)
Steen, Anthony (Waver tree)


Howell, David (Guildford)
Mudd, David
Stewart, Donald (Western Isles)


Howell, Ralph (North Norfolk)
Neave, Airey
Stewart, Ian (Hitchin)


Hunt, David (Wirral)
Nelson, Anthony
Stokes, John


Hunt, John
Neubert, Michael
Stradling Thomas, J.


Hutchison, Michael Clark
Newton, Tony
Tapsell, Peter


Irving, Charles (Cheltenham)
Normanton, Tom
Taylor, R. (Croydon NW)


James, David
Nott, John
Taylor, Teddy (Cathcart)


Jenkin, Rt Hon P. (Wanst'd &amp; W'df'd)
Onslow, Cranley
Tebbit, Norman


Jessel, Toby
Oppenheim, Mrs Sally
Temple-Morris, Peter


Johnson Smith, G. (E Grinstead)
Page, John (Harrow West)
Thomas, Rt Hon P. (Hendon S)


Jones, Arthur (Daventry)
Page, Rt Hon R. Graham (Crosby)
Thompson, George


Jopling, Michael
Parkinson, Cecil
Townsend, Cyril D.


Joseph, Rt Hon Sir Keith
Pattie, Geoffrey
Trotter, Neville


Kaberry, Sir Donald
Penhaligon, David
Tugendhat, Christopher


Kershaw, Anthony
Percival, Ian
van Straubenzee, W. R.


Kimball, Marcus
Peyton, Rt Hon John
Vaughan, Dr Gerard


King, Evelyn (South Dorset)
Pink, R. Bonner
Viggers, Peter


King, Tom (Bridgwater)
Powell, Rt Hon J. Enoch
Wakeham, John


Kitson, Sir Timothy
Price, David (Eastleigh)
Walder, David (Clitheroe)


Knight, Mrs Jill
Prior, Rt Hon James
Walker, Rt Hon P. (Worcester)


Knox, David
Pym, Rt Hon Francis
Wall, Patrick


Lamont, Norman
Raison, Timothy
Walters, Dennis


Lane, David
Rathbone, Tim
Warren, Kenneth


Langford-Holt, Sir John
Rawlinson, Rt Hon Sir Peter
Weatherill, Bernard


Latham, Michael (Melton)
Rees, Peter (Dover &amp; Deal)
Wells, John


Lawrence, Ivan
Rees-Davies, W. R.
Welsh, Andrew


Lawson, Nigel
Reid, George
Whitelaw, Rt Hon William


Lester, Jim (Beeston)
Renton Rt Hon Sir D. (Hunts)
Wiggin, Jerry


Lewis, Kenneth (Rutland)
Renton Tim (Mid-Sussex)
Wilson, Gordon (Dundee E)


Lloyd, Ian
Rhys Williams Sir Brandon
Winterton, Nicholas


Loveridge, John
Ridley, Hon Nicholas
Wood, Rt Hon Richard


Luce, Richard
Ridsdale, Julian
Young, Sir G. (Ealing, Acton)


McAdden, Sir Stephen
Rifkind, Malcolm
Younger, Hon George


MacCormick, Iain
Rippon, Rt. Hon Geoffrey



McCrindle, Robert
Roberts, Wyn (Conway)
TELLERS FOR THE AYES:


McCusker, H.
Rodgers, Sir John (Sevenoaks)
Mr. Spencer Le Marchant and


Macfarlane, Neil
Ross, Stephen (Isle of Wight)
Mr. Michael Roberts.


MacGregor, John
Ross, William (Londonderry)





NOES


Abse, Leo
Blenkinsop, Arthur
Carmichael, Neil


Allaun, Frank
Boardman, H.
Carter, Ray


Anderson, Donald
Booth, Rt Hon Albert
Carter-Jones, Lewis


Archer, Peter
Boothroyd, Miss Betty
Cartwright, John


Armstrong, Ernest
Bottomley, Rt Hon Arthur
Castle, Rt Hon Barbara


Ashley, Jack
Boyden, James (Bish Auck)
Clemitson, Ivor


Ashton, Joe
Bradley, Tom
Cocks, Michael (Bristol S)


Atkins, Ronald (Preston N)
Bray, Dr Jeremy
Cohen, Stanley


Atkinson, Norman
Brown, Hugh D. (Provan)
Coleman, Donald


Bagier, Gordon A. T.
Brown, Robert C. (Newcastle W)
Colquhoun, Ms Maureen


Barnett, Guy (Greenwich)
Brown, Ronald (Hackney S)
Concannon, J. D.


Barnett, Rt Hon Joel (Heywood)
Buchan, Norman
Cook, Robin F. (Edin C)


Bates, Alf
Buchanan, Richard
Corbett, Robin


Bean, R. E.
Butler, Mrs Joyce (Wood Green)
Cox, Thomas (Tooting)


Benn, Rt Hon Anthony Wedgwood
Callaghan, Jim (Middleton &amp; P)
Craigen, J. M. (Maryhill)


Bennett, Andrew (Stockport N)
Campbell, Ian
Cryer, Bob


Bidwell, Sydney
Canavan, Dennis
Cunningham, G. (Islington S)


Bishop, E. S.
Cant, R. B.
Cunningham, Dr J. (Whiteh)




Dalyell, Tam
Kaufman, Gerald
Rees, Rt Hon Merlyn (Leeds S)


Davidson, Arthur
Kelley, Richard
Richardson, Miss Jo


Davies, Bryan (Enfield N)
Kerr, Russell
Robert, Albert (Normanton)


Davies, Denzil (Llanelli)
Kilroy-Silk, Robert
Roberts, Gwilym (Cannock)


Davies, Ifor (Gower)
Kinnock, Neil
Robertson, John (Paisley)


Davis, Clinton (Hackney C)
Lambie, David
Robinson, Geoffrey


Deakins, Eric
Lamborn, Harry
Roderick, Caerwyn


Dean, Joseph (Leeds West)
Lamond, James
Rodgers, George (Chorley)


de Freitas, Rt Hon Sir Geoffrey
Latham, Arthur (Paddington)
Rodgers, William (Stockton)


Dell, Rt Hon Edmund
Leadbitter, Ted
Rooker, J. W.


Dempsey, James
Lee, John
Ross, Rt. Hon W. (Kilmarnock)


Dormand, J. D.
Lestor, Miss Joan (Eton &amp; Slough)
Rowlands, Ted


Douglas-Mann, Bruce
Lever, Rt Hon Harold
Sandelson, Neville


Duffy, A. E. P.
Lewis, Arthur (Newham N)
Sedgemore, Brian


Dunn, James A.
Lewis, Ron (Carlisle)
Selby, Harry


Dunnett, Jack
Lipton, Marcus
Shaw, Arnold (Ilford South)


Dunwoody, Mrs Gwyneth
Litterick, Tom
Sheldon, Robert (Ashton-u-Lyne)


Eadie, Alex
Lomas, Kenneth
Shore, Rt Hon Peter


Edge, Geoff
Loyden, Eddie
Short, Rt Hon E. (Newcastle C)


Edwards, Robert (Wolv SE)
Luard, Evan
Short, Mrs Renée (Wolv NE)


Ellis, John (Brigg &amp; Scun)
Lyons, Edward (Bradford W)
Silkin, Rt Hon John (Deptford)


Ellis, Tom (Wrexham)
Mabon, Dr J. Dickson
Silkin, Rt Hon S. C. (Dulwich)


English, Michael
McCartney, Hugh
Sillars, James


Ennals, David
McElhone, Frank
Silverman, Julius


Evans, Ioan (Aberdare)
MacFarquhar, Roderick
Skinner, Dennis


Ewing, Harry (Stirling)
McGuire, Michael (Ince)
Small, William


Faulds, Andrew
Mackenzie, Gregor
Smith, John (N Lanarkshire)


Fernyhough, Rt Hon E.
Mackintosh, John P.
Snape, Peter


Fitt, Gerard (Belfast W)
Maclennan, Robert
Spearing, Nigel


Flannery, Martin
McMillan, Tom (Glasgow C)
Stewart, Rt Hon M. (Fulham)


Fletcher, Raymond (Ilkeston)
McNamara, Kevin
Stoddart, David


Fletcher, Ted (Darlington)
Madden, Max
Strang, Gavin


Ford, Ben
Magee, Bryan
Strauss, Rt Hon G. R.


Forrester, John
Mahon, Simon
Summerskill, Hon Dr Shirley


Fowler, Gerald (The Wrekin)
Marks, Kenneth
Swain, Thomas


Freeson, Reginald
Marquand, David
Thomas, Jeffrey (Abertillery)


Garrett, John (Norwich S)
Marshall, Dr Edmund (Goole)
Thomas, Mike (Newcastle E)


Garrett, W. E. (Wallsend)
Marshall, Jim (Leicester S)
Thomas, Ron (Bristol NW)


George, Bruce
Mason, Rt Hon Roy
Thorne, Stan (Preston South)


Gilbert, Dr John
Maynard, Miss Joan
Tierney, Sydney


Ginsburg, David
Meacher, Michael
Tinn, James


Golding, John
Mellish, Rt Hon Robert
Tomlinson, John


Gould, Bryan
Mendelson, John
Tomney, Frank


Gourlay, Harry
Mikardo, Ian
Torney, Tom


Graham, Ted
Millan, Bruce
Tuck, Raphael


Grant, George (Morpeth)
Miller, Mrs Millie (Ilford N)
Urwin, T. W.


Grant, John (Islington C)
Mitchell, R. C. (Soton, lichen)
Varley, Rt Hon Eric G.


Grocott, Bruce
Moonman, Eric
Wainwright, Edwin (Dearne V)


Hardy, Peter
Morris, Alfred (Wythenshawe)
Walker, Harold (Doncaster)


Harrison, Walter (Wakefield)
Morris, Charles R. (Openshaw)
Walker, Terry (Kingswood)


Hart, Rt Hon Judith
Morris, Rt Hon J.(Aberavon)
Ward, Michael


Hattersley, Rt Hon Roy
Moyle, Roland
Watkins, David


Hatton, Frank
Mulley, Rt Hon Frederick
Watkinson, John


Hayman, Mrs Helene
Murray, Rt Hon Ronald King
Weetch, Ken


Heffer, Eric S.
Murry, Rt Hon Ronald King
Weitzman, David


Hooley, Frank
Newens, Stanley
Wellbeloved, James


Howell, Rt Hon Denis
Noble, Mike
White, James (Pollok)


Hoyle, Doug (Nelson)
Oakes, Gordon
Whitehead, Phillip


Huckfield, Les
Ogden, Eric
Whitlock, William


Hughes, Mark (Durham)
O'Halloran, Michael
Willey, Rt Hon Frederick


Hughes, Robert (Aberdeen N)
Orbach, Maurice
Williams, Alan (Swansea W)


Hughes, Roy (Newport)
Orme, Rt Hon Stanley
Williams, Alan Lee (Hornch'ch)


Hunter, Adam
Ovenden, John
Willams, Rt Hon Shirley (Hertford)


Irvine, Rt Hon Sir A. (Edge Hill)
Owen, Dr David
Williams, Sir Thomas


Irving, Rt Hon S. (Dartford)
Padley, Walter
Wilson, Alexander (Hamilton)


Jackson, Colin (Brighouse)
Palmer, Arthur
Wilson, William (Coventry SE)


Jackson, Miss Margaret (Lincoln)
Park, George
Wise, Mrs Audrey


Janner, Greville
Parry, Robert
Woodall, Alec


Jay, Rt Hon Douglas
Pavitt, Laurie
Woof, Robert


Jeger, Mrs Lena
Peart, Rt Hon Fred
Wrigglesworth, Ian


Jenkins, Hugh (Putney)
Pendry, Tom
Young, David (Bolton E)


John, Brynmor
Phipps, Dr Colin



Johnson, James (Hull West)
Prentice, Rt Hon Reg
TELLERS FOR THE NOES:


Johnson, Walter (Derby S)
Price, C. (Lewisham W)
Mr. Joseph Harper and


Jones, Dan (Burnley)
Price, William (Rugby)
Mr. James Hamiluon.


Judd, Frank
Radice, Giles

Question accordingly negatived.

New Clause 5

TRANSFER OF BUSINESS TO A COMPANY

'(1) Where a person who is not a company transfers to a company a business as a going concern, together with the whole assets of the business, or together with the whole of those assets other than cash, and the business is so transferred wholly or partly in exchange for shares issued by the company to the person transferring the business, the disposal of any interest in land comprised in such assets shall be treated for the purposes of this Act as a disposal (and acquisition) for which no consideration is given.

(2) Subsection (1) does not apply—

(a) to a disposal to a non-resident company, or
(b) to a disposal to a body which is exempt from development land tax by virtue of section 11 above,
but a disposal shall not be regarded as one
to which that subsection does not apply by reason only that it is in fact a disposal for which no consideration is given.'—[Mr. Ian Stewart.]

Brought up, and read the First time.

12.15 a.m.

Mr. Ian Stewart: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: It would be for the convenience of the House to discuss at the same time New Clause 10 [Transfer of business to a Company.] and Government Amendment No. 222.

Mr. Stewart: In Committee we tabled two new clauses relating to the transfer of a business to a company. After the wide ranging debate that we have just had on the broader issues raised by the Bill, we come back firmly to the nuts and bolts.
I should explain briefly the reason for tabling these new clauses and why it has rightly been suggested that Government Amendment No. 222 should be considered at the same time.
One of the points that we made in Committee was that there was no provision in the Bill, as it stood, to protect the position where a business was transferred from personal ownership to a company. There are good precedents—notably capital gains tax—for enabling an unincorporated business to be transferred into company form without it acting as a trigger for capital taxation such

as capital gains tax. We felt at that time that it would be right for the Bill to include a similar provision for development land tax.
Therefore, we tabled two new clauses in Committee—New Clauses Nos. 4 and 5. New Clauses 5 and 10 substantially reproduce those new clauses, although with some alterations in response to criticisms which had been made about the drafting and technicalities of the new clauses.
I think that the general argument is accepted on both sides of the House, that the incorporation of businesses is to be encouraged when that point in their development is reached. That happens every day of the week, in all kinds of businesses and trades. It is helpful not only to the Revenue but to the taxpayer, because it enables him to formalise his affairs within the structure of a company. At the same time it creates a body that is more readily accountable to the Revenue and perhaps more regular in its returns, and so on, because of the statutory requirements that apply to companies.
We also pointed out that no funds would be available if a business were transferred to a company in exchange for shares. Therefore, there would be no receipt of moneys out of which the development land tax could at that time be paid.
Furthermore, in such a transaction the same basic ownership of the property persists in the original partnership or ownership in personal hands both before and after the incorporation takes place, provided that the shares are held by the original owner of the business.
We tabled these new clauses in the hope that they would encourage the Government to come forward with their own proposals, if they were unable to accept ours in detail, which would allow such a provision to be incorporated within the Bill. We had to table the new clauses at this stage because, until a very late date, we were not given sight of the amendment which is now Government Amendment No. 222.
I do not wish to say much more at this stage, beyond welcoming the fact that the Government have now tabled an amendment that goes a good way to meeting the points that we made in Committee. It does not go quite as far as


we suggested or, indeed, would like or think appropriate in these circumstances. We think that some questions need to be asked about it. However, before going further, and in the hope that I may have permission to come back to the Minister with some questions after what he may say on Amendment No. 222, I think it would be better for the hon. Gentleman to introduce and speak to that amendment.

Mr. Denzil Davies: Similar clauses to New Clauses Nos. 5 and 10 were moved in Committee, as the hon. Member for Hitchin (Mr. Stewart) recognised. The intention behind the clauses is to provide relief where an individual or a partnership transfers to a company a business which includes an interest in land for which the individual or the partnership receives shares. This is an attempt to defer the charge to development land tax which would arise under the Bill as presented to the House on Second Reading and in Committee.
We recognised in Committee that there was a problem. Unfortunately, it is not possible to meet either New Clause 5 or New Clause 10. The hon. Gentleman said that there were good precedents for capital gains tax. There are. But unfortunately they are not good precedents for development land tax. I should have been delighted to accept New Clause 10. The draftsmen have wrestled with this problem for some time. I explained in Committee why it was not possible to follow a capital gains tax provision for development land tax. The development land tax is a tax on the disposal of land, not shares. If land is transferred or transmuted into shares there would—in the absence of special provisions—be no tax charge on development land tax if the shares were disposed of. That is the problem.
The Government have brought forward Amendment No. 222, which I concede does not go the whole way, as hon. Gentlemen and the Government would have wished. However, it proved impossible to find any other way in which to solve this problem other than that provided in Amendment No. 222.
The amendment gives relief where, as part of the transfer of the business to a company, a person disposes of an interest in land to the company and receives shares as part of the consideration. The

payment of some or all of the DLT accruing from the disposal of shares, is deferred until either the shares comprised in the consideration or the interest in the land itself are sold, or until the expiration of eight years from the date of incorporation if later. Therefore that is a deferral of tax, and not a complete exemption. It is the deferral until the shares are sold that triggers off the tax charge, or until the expiry of the period of eight years if that is a shorter period. If there has not been a disposal within eight years the tax charge is triggered off. That is the only way in which it can be done. Otherwise, we should have to trace the interests in the shares. That would present considerable complications.
However, I give this assurance—as indeed was the case with the 1965 capital gains tax legislation: the matter was again considered in the light of the way in which the tax operated, and no doubt we shall have to keep this under review. At the moment this is the best effort that we may make. It goes 75 per cent. of the way to meeting the wishes of the Opposition. We shall keep the matter under review and see whether we may improve on it. If there are problems, we shall solve them.
There is one other problem. We have no wish to charge tax where there is a mere transfer from an individual to a company. But this is the best that we can do for the moment. I hope that hon. Gentlemen will accept that there has been an effort to meet at least 75 per cent. of the points they have raised.

Mr. Ian Stewart: With the leave of the House. I shall make a few comments.
I welcome the statement of the Minister of State. The amendment that he introduced goes a considerable way to meeting the essence of the points which we raised.
I imagine that the clause will apply equally to a partnership or an individual.

Mr. Denzil Davies: indicated assent.

Mr. Stewart: Guidance sub-paragraphs are included for the assistance of the board in deciding what is just and reasonable. I imagine it is intended that these notes of guidance on apportionment should be pretty strictly followed in every case and that although it is not


possible to impose technically the exact provisions within the paragraph the board would normally make judgments only about the matters which are mentioned.
Will the provisions for the eight-year deferment interact with the deferral provisions under Clauses 19 and 27? I refer to Clause 19. I suppose that technically I should refer to New Clause 1. I have no doubt that it will be renumbered Clause 19 when the Bill is reprinted. Does the eight-year limit override or interrupt deferral under Clauses 19 and 27? What exactly is the technical position?
12.30 a.m.
An immediate reaction is that it would have been better if, at the expiry of the eight years, the chargeable person had been able to pay by instalments. That would have been an extension of the arrangement, which would have been greatly to the benefit of companies that did not have the money to pay the tax at the time.
However, a period of eight years is a long time. The Minister has fairly said that further consideration can be given to these provisions. Therefore, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Mr. Denzil Davies: We have had a long and interesting debate on a number of fundamental points in this legislation. We have discussed charities and various other matters that go to the root of the legislation. Therefore, I beg to move,
That further consideration of the Bill, as amended, be now adjourned.

Mr. Graham Page: I am a little surprised that the Minister should imply that we have made enough progress on the Bill, after we have dealt with five clauses, only two of which the Government have withdrawn. I am not surprised at the Minister asking that we should adjourn further consideration of the Bill at this stage, when the Government have succeeded in taxing charities by a majority of only five votes. If that is the best vote they can muster, perhaps it would be better if we were to continue these debates tomorrow.

Question put and agreed to.

Bill, as amended (in the Standing Committee), to be further considered this day.

INDUSTRIAL COMMON OWNERSHIP [MONEY]

Queen's recommendation having been signified—

Motion made, and Question proposed,
That, for the purposes of any Act of the present Session to further the development of enterprises owned and controlled by people working in them, it is expedient to authorise—

(1) the payment by the Secretary of State out of moneys provided by Parliament of grants, up to an aggregate of £150,000, for the purpose of assisting a body to provide advice about the organisation of co-operative enterprises and common ownership enterprises;
(2) the payment by the Secretary of State of grants and the making by him of loans to a body out of such moneys for the purpose of assisting the body to make loans to co-operative enterprises and common ownership enterprises in cases where the aggregate amount of the grants made and of the loans for the time being outstanding does not exceed £250,000; and
(3) the payment into the Consolidated Fund of any sum required to be paid into that Fund by the Act aforesaid.—[Mr. Les Huckfield.]

12.33 a.m.

Mr. John Peyton: I do not wish to speak for long at this stage, but I hope that the Minister will be able to explain the Government's position. As far as I understand the position, the Minister simply rose to his feet and moved the motion. He has given no explanation of the Government's position. That is quite unacceptable to the Opposition.
Perhaps I may rehearse the position. So far as I am aware, as I said to the right hon. Gentleman the Leader of the House this afternoon, this Bill is a Private Member's Bill which was introduced into the House in December and given a Second Reading in March. Only yesterday arrangements were made for it to be shuffled into an unusual Committee for a Private Member's Bill. At the same time, amendments were tabled to leave out seven out of eight clauses and to amend the Long Title. In other words, the


whole of these proceedings are being conducted for the purpose of bypassing the need for a Second Reading because the Bill is virtually certain to be rewritten in Standing Committee.
It is true that this apparently innocuous measure was given an unopposed Second Reading by the House in March, but the Government have a rather high-handed way of conducting business these days—[Interruption.] The Parliamentary Secretary to the Treasury is following the tradition set by his predecessor, the right hon. Member for Bermondsey (Mr. Mellish) in making verbal interjections from a seated position. [Interruption.] I do not need advice as to what is or is not in order. I am addressing myself to the question of the Money Resolution which has been proposed by the Government in an effort to make respectable their rather hurried proceedings on this Bill tomorrow morning.
It is strange that the Government should be proposing amendments to a Bill which has been, at least, in the guise of a Private Member's Bill. The Minister has not seen fit to offer the House the slightest explanation of the Money Resolution. If he wishes to intervene I shall be glad to give way—or am I to conclude that the Government have no intention of offering an explanation?
The position is extraordinary. If the Government maintain their position it is unlikely that the Standing Committee on the Bill will make the rapid progress that an innocent measure could be expected to make.

The Parliamentary Secretary to the Treasury (Mr. Michael Cocks): Threats.

Mr. Peyton: The Patronage Secretary addresses me on the subject of threats. An accusation of making threats comes ill from him. [Interruption.] The House will be in difficulty. I am certainly not going to be pushed out of the way by a total refusal by any Minister to explain the Government's position. The Government have conducted themselves in a rather informal manner. They seek to rewrite a Private Member's Bill, thus bypassing the need for a Second Reading. They ask the House to accept a Money Resolution without offering the slightest explanation. I find that wholly unacceptable.
The Minister is not making life easier for himself or anyone else. I hope that he will now see fit to offer some explanation. I ask him that out of courtesy to the House, not just to myself. I hope that the Minister, who has not been on the Front Bench long, will deem it his duty to offer an explanation of the Government's position. I am waiting for him to do that.
I raised the matter this afternoon and the Leader of the House at first indicated that he would make a statement on the subject. He then modified that position, but he said that the Government's position would be made clear to the Opposition before proceeding. The Minister's presence, saying nothing, falsifies and undermines the position of the Leader of the House.

Mr. Eric S. Heffer: On a point of order, Mr. Deputy Speaker. Is the right hon. Gentleman on a point of order or is he making a speech? May we know precisely what is happening?

Mr. Deputy Speaker (Mr. Oscar Murton): The right hon. Gentleman is putting his points in connection with the Money Resolution, and he is perfectly in order to do so.

Mr. Peyton: I am very much obliged, Mr. Deputy Speaker, for your guidance and assistance—not that I particularly need assistance in this case.
The Government, true to their recent standard of conduct, are once more offering a blatant insult to the House. They are not giving even the bones of an explanation of their intentions with regard to the Bill. All that we know is that they have virtually rewritten the Bill.
If the Minister is taking advice from his Secretary of State, I very much welcome that, because he needs it. It would be courteous of him to offer an explanation of the Government's intentions. That would be of assistance to the House, the hon. Gentleman and the Government. But I gather that it is not his intention to give an explanation. Therefore, my hon. Friends and I shall be left in doubt about the Government's intentions, and those doubts will lead us to rather unfavourable conclusions, in which case the Minister cannot expect to make the same progress with the Bill as he might have expected.
I shall sit down now, because I am sure that my hon. Friends will be glad to endorse my judgment on the hon. Gentleman and the Government for an almost deliberate lack of courtesy to the House and total failure by them to explain their intentions. We have had a certain amount of that sort of conduct in recent weeks. The Patronage Secretary, who is so good with his monosyllabic advice to others, might take some of it himself and learn that it is the Government's business to offer some explanation to the House. I am glad to note that the Secretary of State appears to think that that is not altogether an outlandish request.
I very much hope that the Under-Secretary, who has not been long in his office, will now offer an explanation of the Government's position.

12.43 a.m.

The Under-Secretary of State for Industry (Mr. Les Huckfield): I intended no discourtesy to the right hon. Gentleman. I spent a considerable time in the House this afternoon explaining to him the exact purpose of the Money Resolution.
I intended no discourtesy to the House. In fact, I should prefer to reply to the various points that I am sure hon. Members on both sides of the House wish to make in what I hope will be a short debate.
The amendments that are proposed would leave the Bill substantially unchanged in its content. I say that to the right hon. Gentleman specifically, because it was a Bill—[Interruption.] I say that because I am sure that the right hon. Gentleman will be aware that on 12th March, on the Floor of the House, his party gave assent to the broad principles of the Bill. I am sure that he will also recognise that the particular bits of this measure to which his party objected on that day have been taken out. Therefore, we have a Bill which has been basically approved by the right hon. Gentleman's party. We have a situation that I have already tried to explain to the right hon. Gentleman this afternoon.
I hope that we can now proceed as fast as possible. I intended no discourtesy at all. I am fully prepared to reply to the various points that may arise in what I hope will be a short debate.

Mr. Peyton: What the hon. Gentleman really must not conclude is that a private conversation in the Corridor amounts to an explanation to the House of the Government's position on any Bill. We are on common ground that the Bill had a Second Reading, but the Government are now attempting to rewrite it. All I have been asking for is an explanation of the Government's position. The hon. Gentleman has just begun to give one, and for that I am grateful.

Mr. David Watkins: rose—

Mr. Norman Tebbit: rose—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Mr. Tebbit.

Mr. David Watkins: On a point of order, Mr. Deputy Speaker. We are slightly unclear about which hon. Member you called to speak.

Mr. Deputy Speaker: I called the hon. Member for Chingford (Mr. Tebbit).

Mr. Ioan Evans: On a point of order, Mr. Deputy Speaker. As we are discussing a Private Member's Bill put forward by my hon. Friend the Member for Consett (Mr. Watkins), perhaps we should hear what he has to say. I understand that he has met the Government and that the Bill has had a Second Reading and has been accepted by the whole House. Amendments have been put forward by the Government after discussions with the Opposition because the Opposition wished that some amendments be made. The Bill is to be considered in Committee tomorrow. May we have an explanation from my hon. Friend the Member for Consett, whose Bill this is? It is not a Government Bill.

Mr. Deputy Speaker: I have called the hon. Member for Chingford (Mr. Tebbit). We shall see who catches my eye next.

Mr. Tebbit: One thing is certain. Tonight we are not discussing a Private Member's Bill but what is on the Order Paper, which is a Money Resolution. That resolution was moved in an extraordinarily incompetent and half-hearted style by a Minister of the Crown. Even if we were discussing the substance of the Bill, we would no longer be discussing a


Private Member's Bill that was introduced into this House last December and which had its Second Reading on 12th March this year, because the Government propose to delete seven clauses of this eight-clause Bill, to change the Long Title, and to amend Clause 8, which is the Short Title.

Mr. Deputy Speaker: I do not think that those matters appear in the Money Resolution.

Mr. Graham Page: On a point of order, Mr. Deputy Speaker. The Money Resolution says
That, for the purposes of any Act of the present Session".
We want to know what the Act is.

Mr. Tebbit: What is certain is that we cannot refer only to the money without referring to that on which it is proposed that the money will be spent. The point I seek to make is that the Bill that was given a Second Reading is no longer the Bill with which the Government wish to proceed. The Government are proposing to proceed with a Bill of their own. The Minister said, as his excuse for behaving as he did, that he had had a conversation with my right hon. Friend the Member for Yeovil (Mr. Peyton) in the Corridor this afternoon.
As a way of asking Parliament to approve public expenditure that surely must rate as something even more extraordinary than the manner in which Ministers, or civil servants, when they are dissatisfied with a decision in the Cabinet, now proceed to publish the Cabinet papers. We surely should get back—

Mr. Deputy Speaker: Order. No reference to Cabinet papers is to be found in the Money Resolution.

Mr. Tebbit: The Minister advances, as his case for the Money Resolution, the private conversation that he had with my right hon. Friend the Member for Yeovil (Mr. Peyton) in the corridor outside. Whatever we say about the way other business is transacted, that way of con ducting financial business in this House is something we have not seen before and which we want to hear a lot less of in future.
Reference has been made to the fact that the Opposition did not oppose the Second reading of the Bill to which this

Money Resolution is said to relate. That is correct, but I say again that that was not the Bill that the Government are now proposing should go through Committee tomorrow. It is a very different matter.

Mr. Ivor Clemitson: The hon. Gentleman says that if the amendments that the Government put forward are passed in Committee it will be an entirely different Bill. Will he say in what important point of substance it will be a different Bill?

Mr. Deputy Speaker: Order. I hope the hon. Gentleman will do nothing of the sort, but will address himself to the Money Resolution.

Mr. Tebbit: The hon. Gentleman does ago, when I read a book—[Interruption]—called "Australia, the Land Evolution Forgot". I can well understand now what that book was getting at.
We have had enough of those hominids who cannot get up on their legs, making guttural noises late at night, and it is about time one in particular was quiet. No doubt if that hon. Member wants to make a speech at some time he will try to do so, but in the meantime—

Mr. Russell Kerr: I am trying to help the hot. Gentleman.

Mr. Tebbit: The hon. Gentleman can help me by going back down under, to where he came from.

Mr. Deputy Speaker: Will the hon. Gentleman help the Chair by dealing with the Money Resolution?

Mr. Tebbit: I shall be happy to do so, Mr. Deputy Speaker, when I can make myself heard above the uproar from the hon. Member for Feltham and Heston (Mr. Kerr). When I say that it would be a good thing if he went back down under, I do not mean Australia, I mean the place where he became rather excited earlier this evening.
If I may continue, the then Minister of the day, referring to this Money Resolution, which he said might be produced, commented:
If the Bill is given a Second Reading, the Government will be prepared to put down a Money Resolution before the Bill is taken in Committee.


They could not have done it much later and still been before the Committee stage. The Minister added:
In this Money Resolution the Government will make their intentions clear on the sums they are prepared to make available."—[Official Report, 12th March 1976; Vol. 907, c. 870.]
In that a sum is named in the resolution, I suppose that that has been done, but in that we have heard no case from the Minister about why that sum has been selected and what it is supposed to cover, we are entitled to hear a little more explanation. [Interruption.] If the hon. Member wants to know the answer to that question, it is a matter for the Chair who is called and not for me.

Mr. Ioan Evans: My hon. Friend's point is that this debate will last only for 45 minutes and that if the hon. Member does not resume his seat and allow my hon. Friend the Member for Consett (Mr. Watkins) to speak, my hon. Friend will not be able to speak.

Mr. Tebbit: If the hon. Gentleman could restrain his hon. Friends from their constant nattering and sedentary interventions he might get the Money Resolution through more quickly. A little more of the normal courtesy—[Interruption.] There you are, Mr. Deputy Speaker—there they go again. As soon as one tries to meet a request for brevity by saying that it is difficult to be brief under constant barracking, barracking starts again. So it becomes less and less likely that the hon. Member will have time—[Interruption.] The barracking used only to come from below the Gangway, but tonight it comes from what purport to be some of Her Majesty's Ministers as well. I do not know whether they think that they are helping their hon. Friend to get to the point at which he can make his speech, but if they do they are as wrong in that as they are in most other things they do. [Interruption.] There is another one at it now.
Considering the reluctance with which the Minister who was supposed to be introducing the resolution got to his feet, it is remarkable how eager other Ministers are to keep opening their mouths and shouting from a sedentary position. If they want to join in why do they not stand up and make a speech?
After all, the resolution not only affects the Bill; it is a matter of public expenditure. Recently, Ministers have been saying a good deal about the need to contain public expenditure. We have heard a great deal about the Prime Minister's resolution not to let the borrowing requirement get out of hand. Now we are confronted with another Money Resolution, further public expenditure, and no explanation at all.
Nothing in the Bill requires the expenditure of taxpayers' money. The Bill could be enacted and aid could be given by reforming the legislation relating to common-owned businesses without any public expenditure being required. We are not told why the Government need public expenditure for this purpose. Indeed, it was not until this morning that we saw what the Government propose to do with the Bill at all.
The essential thing about this expenditure is that it will not only increase the borrowing requirement and of itself be inflationary; it is also likely to be discriminatory as between one sector of industry and another. In those circumstances it seems to me that it would be very unwise for us calmly to give our assent tonight to another slice of public expenditure.
We hope that the Minister will ask leave of the House to speak again, which, with due consideration, we may grant to him—although some of my hon. Friends may not want to hear him again, in view of his poor showing the first time. Perhaps it would be better if the Secretary of State replied to the debate. We hope to hear more justification for this sum of money. It might not be much—we are accustomed to the Secretary of State doing a 90-minute act for £20 million or so, and this sum is very much smaller than that.
There are now eight Ministers in the Chamber. When did we last have eight Ministers and the Chief Patronage Secretary in a 45-minute debate?

Mr. Kenneth Lomas: May we have it quite clearly understood whether there will be a vote or not? Tedious repetition and boring comments are not doing the House any good. If the Opposition have decided to vote against this Money Resolution,


will they say so now, so that we can go home?

Mr. Deputy Speaker: Order. This debate must finish at 1.18 am and there are still a number of hon. Gentlemen who wish to catch my eye.

Mr. Tebbit: We shall get on with the debate much better when we manage to restrain hon. Members on the Government Front Bench—

Mr. Tom Litterick: Get your hand out of your pocket, you slovenly article.

Mr. Tebbit: —and when we restrain hon. Members on the Front Bench below the Gangway.

Mr. Robert Hughes: On a point of order, Mr. Deputy Speaker. Of course I accept that the conduct of the House is in your hands, but the hon. Member for Chingford (Mr. Tebbit) is totally out of order, and he continues to be so. Will you assert your authority?

Mr. Deputy Speaker: I have done my best to draw hon. Members' attention to the fact that the discussion on this matter must stop at 1.18 a.m.

Mr. Peyton: On a point of order, Mr. Deputy Speaker. I hope that you will address some guidance to the Government side of the House, particularly to those hon. Members below the Gangway.

Mr. Tebbit: At 1.18 a.m., as you reminded us, Mr. Deputy Speaker, the debate on this matter will end. I hope that we shall be able to hear something from other hon. Members before then. Whether other hon. Members get the opportunity to speak will depend partly on the conduct of hon. Members opposite, and so far their conduct has not been very impressive. [Interruption.] So far we have had from the Minister no explanation of the purpose for which this money would be used. All he said was that the money would be used in a discriminating way between one sector of industry and another. The Minister has given us no reasons why this money is needed for the Bill—to which this House has given a Second Reading—to be able to be operated. It is not needed. There is no case, in my view, for further public expenditure of this nature—

Mr. Bob Cryer: He has said all that before.

Mr. Tebbit: There we go again, Mr. Deputy Speaker—

Mr. Neville Sandelson: Get on with it, you buffoon. You are bringing the House into disrepute.

Mr. Tebbit: The hon. Gentleman does himself no good by shouting from a sedentary position that something will bring the House into disrepute. It is difficult to get on with a speech when, contrary to all the customs of the House, one is subject to constant barracking.
The Minister has made no case to show why this sum of money should be required and why he cannot do what he wants for less. Is he satisfied that if, as the Government propose, a body is to be set up to distribute money on a non-commercial basis, he has enough money to act in that way? After all, if the money is to be distributed on a non-commercial basis there can be few limits on the amount it is possible to spend in that manner. I hope therefore that he will tell us why this sum is necessary,
How much of the money will be expended on what one would broadly call administration expenses? How much will be spent in actually carrying out the purposes of the Bill, which is the making of grants and loans. If the Minister cannot say—if he has come to the House not prepared to answer any of the questions put to him but merely hopes to slip the Money Resolution through late at night on the sly, on the basis of a conversation in a corridor with my right hon. Friend the Member for Yeovil—he and his hon. Friends should be discouraged from thinking that they can get away with that sort of conduct in future.

1.8 a.m.

Mr. David Watkins: The level of the debate so far has not been particularly high, and there has been a great deal of repetition about some points. I hope that by comparison I might apply myself directly to the Money Resolution and seek to deal with one or two of the points raised.
First, I urge the House to approve the resolution. I remind it again that the Bill received an unopposed Second Reading on Friday 12th March after a full debate.


During the debate my hon. Friend the Member for Glasgow, Kelvingrove (Mr. Carmichael), who was then Under-Secretary of State for Industry, stated that if the Bill received a Second Reading the Government would table a Money Resolution before the Committee stage began. He also said specifically that the amount the Government would allow for in the resolution would be less than what was originally proposed in the Bill. That fact is reflected in the resolution. I proposed in the Bill expenditure of £1,060,000 spread over four years. The resolution proposes an expenditure of £400,000 spread over five years. The amount now proposed is entirely in line with the suggestion made by the Government spokesman at that time. It is substantially less than half that proposed in the original Bill, and is spread over a longer period.
I submit that the facts recorded in the Second Reading debate rather make nonsense of some of the allegations made so far by hon. Members opposite. I know that the right hon. Member for Yeovil (Mr. Peyton) has felt that the Government have taken over the Bill and altered it completely, but I refute that suggestion. The Bill has certainly been redrafted—and with my agreement, as the sponsor of it—but it has not been altered in substance, except in the reduction in expenditure which will be proposed in amendments to come before the Committee when it meets. It is for that reason that the Money Resolution is proposed.

Mr. Patrick Mayhew: The hon. Gentleman says that it has not been altered in substance, but does not New Clause 1 stipulate that the body, now to be called the relevant body, which is to receive either the grants or the loans, is to be a body on which one or more trade unionists are represented? Is not that a completely different body from that proposed by the Bill, and is not that very substantial? It cuts out any number of bodies the sole purpose of which may be to encourage common ownership but which may not wish to have a trade union represented on them.

Mr. Watkins: I do not accept that. The body is not different. What has emerged is the hon. and learned Gentleman's suspicion of trade unionists. He has made a quite irrelevant intervention to express his prejudices in that direc-

tion. I do not accept that as a valuable point. I do not accept that it is any substantial alteration at all, or that the Bill is in substance at all altered from that which was given its Second Reading on 12th March, except for the reduction in expenditure and the deletion of two clauses dealing with conversions into common ownership, which are proposed to be deleted because they are covered in two clauses added on to the current Finance Bill.
There is no lack of precedent for major alterations of this sort to Private Members' Bills. I shall not weary the House with a large number of them, but shall mention one, because I was involved in it. In 1968 I was lucky in the Ballot and was able to pilot through the House the Bill that became the Employer's Liability (Compulsory Insurance) Act 1969. That was also legislation in what was then an unprecedented field. That Bill was similarly redrafted by the Government, in consultation with myself. Indeed, it was much more radically altered than this Bill. It became law and has been in operation successfully now for a number of years.

Mr. Tebbit: rose—

Mr. Watkins: The hon. Gentleman has already spoken at very great length and has left me very little time. This remains the same Bill. To those who say that it is altered in substance, I can only say, first, that their memories have dimmed and, secondly, that they have not read the new proposed amendments, which are identical in substance. The money is less than half that which has already been agreed in principle by the House, and I hope the House will agree to the Money Resolution.

1.15 a.m.

Mr. Les Huckfield: I hope that the hon. Member for Chingford (Mr. Tebbit) feels pleased with himself, because he has prevented a great many of his hon. Friends from speaking, particularly by the way in which he carried on. I cannot understand his position, because he is complaining that the Bill has been changed. I hope he has gone through the Bill, as I have. All that the Government propose to do is to transfer to the Finance Bill, which is already in Committee, precisely those clauses to which the hon. Gentleman objected on Second


Reading. In other words, as my hon. Friend has rightly said, this is substantially the same Bill as that which was introduced on 12th March and which the hon. Gentleman approved of on that date. I hope that the hon. Member for Chingford will stop making these bitter personal attacks, and read his own speech of 12th March.
As my hon. Friend says, the Money Resolution enables my right hon. Friend to make provision for grants of up to £30,000 a year for five years, to meet the administrative expenses of the advisers, which my hon. Friend mentioned. It also enables grants or loans of up to £50,000 a year for five years for on-lending by the recognised body to common ownership and co-operative enterprises. Grants to enterprises by the body are not provided for.
We went into this in great detail on 12th March, when the hon. Member for Chingford made great sport with the fact that he was delighted at surprising my hon. Friends by agreeing to the Bill. Having gone through that great performance, in which he tried to impress every Labour Member, he has turned round 180 degrees. From what we can see and from the amendments turned down—

It being three-quarters of an hour after the commencement of proceedings on the motion, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted Business).

Question agreed to.

Resolved,
That, for the purposes of any Act of the present Session to further the development of enterprises owned and controlled by people working in them, it is expedient to authorise—

(1) the payment by the Secretary of State out of moneys provided by Parliament of grants, up to an aggregate of £150,000, for the purpose of assisting a body to provide advice about the organisation of co-operative enterprises and common ownership enterprises;
(2) the payment by the Secretary of State of grants and the making by him of loans to a body out of such moneys for the purpose of assisting the body to make loans to co-operative enterprises and common ownership enterprises in cases where the aggregate amount of the grants made and of the loans for the time being outstanding does not exceed £250.000; and
(3) the payment into the Consolidated Fund of any sum required to be paid into that Fund by the Act aforesaid.

REDHILL (FORENSIC PSYCHIATRIC UNIT)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Snape.]

1.17 a.m.

Mr. George Gardiner: The Matter I raise in this Adjournment debate is the current proposal by the South-West Thames Regional Health Authority to build a regional forensic psychiatric unit in Redhill, immediately adjacent to the Royal Earlswood Hospital, which is the home of some 650 mentally handicapped people, including around 80 children.
This proposal is the end product of a process that began with the Butler Report, which urged the creation of these units for patients who present severely disruptive behaviours, who suffer from psychopathic or severe personality disorders, some of whom may be offenders, but all of whom need to be kept in conditions of substantial—though not high—security.
In this debate I do not wish to question that such units are necessary. Neither do I intend to take issue with the guidelines offered to regional health authorities by the Department, nor even with the criteria adopted by the working party set up to find a suitable site within the South-West Thames Region. My purpose is purely to sound an alarm to the Minister that a site is being proposed that will cause damage and distress unforeseen by the working party, in order that work can start to find an alternative before more valuable time is lost.
The working party began by considering nine possible hospital sites. These were narrowed to two meriting serious feasibility study, and from these the Earlswood Hospital site was its final choice. Its decision was announced on 14th April, and a mere six weeks allocated for so-called local consultation. After protests, this was extended to 10 weeks, expiring later today. Since then members of the working party and its chairman have put in many hours attending local meetings and hearing objections.
But they have been engaged in a process not of meaningful consultation but of explanation. I and others have asked for details of other sites considered,


and the reasons for preferring Earlswood. We have been refused. But how can we have meaningful consultation when only one option is offered to us. Throughout this, so that we can make proper comparisons, I have urged that we should take a broad community view, but how can we possibly do this without knowing all the options available? I hope that the Minister will offer guidance that in future local consultation should start at the short list stage, and not when a working party's mind is already made up. Small wonder there have been local complaints that the working party is merely "going through the motions", and that we are being presented with a fait accompli.
I hope that tonight the Minister will be able to assure us that this is still an open question, that his mind is not closed, and that full account will be taken of all the objections lodged by residents, medical opinion, and the East Surrey Community Health Council.
I recognise that no site proposed for such a security unit, designed to accommodate criminal elements among others, will ever be greeted with enthusiasm by local residents. I have no intention of saying "Yes, there should be a security unit, but not on our doorstep". However, the fact that there will always be objections from local residents does not mean that in some instances they may not have a very valid point.
Already in the tight area to the south and east of Redhill there is a security unit within the Philanthropic School run by Wandsworth Borough Council for juvenile delinquents.
Within the Earlswood Hospital there is a locked ward, though, having visited it, I must say nearly all its occupants are in such a condition that they would have difficulty in getting more than 500 yards from it. Then, just to the east, there is the Rainer Foundation Home for problem teenagers.
Is this not enough for any one community to cope with? The generosity of local people has already been shown by their friendship and understanding of the mentally handicapped patients of the Royal Earlswood. But there is a grave danger in pushing them too far.
Furthermore, the working party's proposal appears to have been drawn up with no knowledge of the fact that a new middle school has been built and recently opened within a few hundred yards of the proposed site. Its catchment area includes a large housing estate nearby—and the school and estate are linked by a footpath running right past this site. Is no thought to be given to the fears of mothers and children who have to use that path perhaps four times daily?
The revised report of the Department of Health and Social Security working party on security in NHS hospitals included the statement:
It is important that an overbold decision leading to the establishment of a unit in an urban setting close to a reluctant community should not result in a situation where in the long term it proves impossible to admit to the unit the full range of patients for whom it should cater.
I submit that we have just such an "overbold decision" here, and it would be wise for the authorities to recognise the fact.
I now turn to another group of objections which must weigh very heavily on the Minister's mind—those from the patients of the Royal Earlswood Hospital, their relatives, the staff, voluntary workers and the Friends of the Hospital. I speak with some feeling, for, since entering this House, I have followed closely the marvellous work undertaken at this hospital, as did my right hon. and learned Friend the Member for East Surrey (Sir G. Howe) who represented Reigate before me. Indeed, both his wife and mine are now closely involved with the Friends of Earlswood Hospital.
Since its foundation in the last century this hospital has followed a progressive "open door" policy. Its mentally handicapped patients, many of whom live there throughout their lives, are free to wander through the grounds, and indeed are a familiar sight on shopping expeditions and walks into Redhill. There is splendid community involvement—but, as one letter to me observed:
it has taken many years of hard, heart-aching work to persuade the public to accept our children.
Of course, many of these patients effectively remain children throughout their lives.
There is a mountain of evidence that these patients, and the understanding they get from the community, will suffer enormously if a unit including psychopaths and convicted criminals is made part of their home and hospital complex—for inevitably the community will come to see the two institutions as one.
I submit that it is a monstrous injustice to these unfortunate and defenceless people to graft a forensic psychiatric unit on to a hospital catering solely for the mentally handicapped. There is strong medical opinion that for these and other administrative reasons the psychiatric unit would be more properly located with a psychiatric hospital. Remember, too, that the Earlswood Hospital contains some 80 children, who receive their lessons in its classrooms.
I have received so many submissions on this point from those who work with the mentally handicapped, from their families, from doctors, from the local branch of the Confederation of Health Service Employees, and, indeed from fellow Members, including my right hon. and learned Friend the Member for Surrey, East that I shall read the Minister but one letter from Mr. George Lee, Secretary-General of the National Society for Mentally Handicapped Children. He writes:
Parent members of this Society in the district, especially those whose children, of whatever age, are cared for in the Royal Earlswood Hospital, are acutely distressed at the effects such a proposal will have on life in the Hospital, and on the image of the mentally handicapped.
I am writing therefore, to associate the National Society unequivocally with the local concern and to express the hope that you might be able to ensure that the responsible authorities have given the most careful consideration to the anxieties which have been aroused and also to possible alternatives.
But, alas, neither the area health authority nor anyone else can consider the possible alternatives, because this information is kept from them.
However, despite the lack of information, I must tell the Minister that the East Surrey Community Health Council has adopted a most responsible approach to this matter. It has studied the Royal Earlswood proposal, and the working party's arguments for it. At the same time, it has accepted the need for a forensic psychiatric unit, and has no objection to one being located in its own district.

It is quite willing to have one on its doorstep. That is quite a brave position for such a council to take up, but it has also looked at other hospitals in the district, including a psychiatric hospital, and has concluded that this psychiatric hospital matches the working party's own site criteria far better than the hospital for the mentally handicapped that it has chosen.
I do not know whether its alternative is the best, but if a psychiatric hospital can be found within its own district—and within my own constituency—that measures up to the criteria, I am sure there are several others that might profitably be examined too.
All these objections are due to be considered by the Surrey Area Health Authority later today, before reporting to the regional authority in time for its meeting on 14th July. Of course, I cannot anticipate either decision.
My purpose tonight is simply to alert the Minister to the fact that a great deal of information and evidence has come forward since the proposal was made known which cannot possibly have been taken into account by the working party since its procedures barred it from undertaking meaningful consultations at the formative stage.
I recognise that the Secretary of State is anxious to see that these forensic psychiatric units are built, and that time is an important factor. But the very worst outcome would be for the regional authority, or indeed him himself, to feel stampeded by shortage of time into making a bad decision. May I urge him to use his influence with the regional authority to persuade it to open consideration of other sites now, before more valuable time is lost, for I warn him that if he accepts this proposal, presented without any meaningful prior consultation, it will generate untold bitterness not only among local residents, doctors and NHS staff, but among the most defenceless members of our society—namely, the mentally handicapped.

1.30 a.m.

Sir Geoffrey Howe: I am grateful to my hon. Friend the Member for Reigate (Mr. Gardiner) and to the Minister for allowing me a few minutes to intervene in this important debate.
I wish to underline the points made by my hon. Friend on what is inevitably a difficult issue. No more than he would I, on behalf of my constituents, suggest that such an institution should be established other than in our part of the country. This is an important part of the social service network. It is, therefore, difficult to decide where such a unit should go.
I recognise that the working party has given careful consideration to the issues that arise. I ask the Minister and the authorities that operate beneath him in this matter to recognise that this proposal, rightly or wrongly, has given rise to a great deal of concern over a wide area spreading into my constituency. For example, residents' associations as far afield as South Nutfield and Nutfield have objected to it. The Purley and Caterham Districts Society for Mentally Handicapped Children has also objected to it. These people, with an enlightened view of the community's needs in these matters, feel a genuine sense of anxiety, which is supported by the Friends of the Royal Earlswood—an organisation which is concerned for the welfare of patients of this kind.
I suggest that the siting of an institution of this kind can be acceptable only if the process by which the decision is arrived at commands the confidence of the community.
Mr. Turner, the working party chairman, said at the meeting a few days ago that the community's understanding is vital. It is quite clear that a meeting of that kind, attended by 400 people of whom only two supported the working party's recommendation, has not succeeded in achieving that kind of community understanding.
The Surrey Mirror and County Post has been reporting these matters fairly and will play a part in helping to secure understanding, but what is missing, as my hon. Friend pointed out, is the feeling that a genuine process of consultation has taken place.
It is difficult to believe that in this case, any more than in the cases of Stan-stead and Maplin, for example, the consultation has been genuine if the people being consulted are not allowed sight of the alternatives and of the reasons that

led people away from those alternatives, however well the working party may have considered them. That point was made in another place by my hon. Friend's predecessor, Lord Reigate.
If people are not given an insight into the alternatives and the reasons for the final decision, they will believe that the process has been conducted on the footing of the old bad rule for judges "Do not trouble me with the evidence. My mind is already made up". There is bound to be a feeling that the community has not been troubled with the evidence because it would add to the difficulty of arriving at a fully consultative decision.
I urge the Minister to consider that point sympathetically. It is important not only to get the right decision but for the community to be taken along with the rightness of that decision.

1.33 a.m.

The Under-Secretary of State for Health and Social Security (Mr. Eric Deakins): I welcome the opportunity of giving the hon. Member for Reigate (Mr. Gardiner) and his right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) some background to the Department's policy that regional security units—which will be specially funded—should be built throughout the country, to explain more about the type of patient likely to be accommodated in these units, and to say something about the South-West Thames Regional Health Authority's proposals, and the reasons behind its working party's suggestion that the unit should be built at Redhill.
Since its inception the National Health Service has had the responsibility of providing facilities to treat all types of patients with mental disorder, the only exception being those comparatively few who require to be treated in conditions of maximum security in the special hospitals. The Mental Health Act 1959 did not change this fundamental responsibility.
In recent years there has been a growing problem as more and more psychiatric hospitals have become entirely "open-door", but have often not made alternative provision for those continuously difficult and behaviourally disturbed patients who were formerly contained in locked wards. We certainly do


not wish to see a reversal of the trend towards more open care and treatment of the great majority of patients in hospitals for the mentally disordered. However, places need to be available in each region for patients requiring treatment with varying degrees of supervision.
The Department of Health and Social Security established a departmental working party in 1971 to consider the present and future need for security and to make recommendations. This working party and the Interim Report of the Butler Committee on Mentally Abnormal Offenders both emphasised the urgent need for special units to be provided for patients requiring a degree of security. Since then we have been pressing health authorities to meet this need by establishing regional units. The initial aim is to provide 1,000 places in England by 1980, either by adapting existing buildings or by constructing new purpose-built premises. Because of the urgency and importance attached to the establishment of regional security units we decided to make special financial allocations to regions to meet the capital costs once proposals have been agreed.
This is the background to the policy. I think there are few people who would argue with the proposition that facilities where staff can more adequately manage difficult patients are urgently needed: this provision would take pressure off the more open facilities in our psychiatric hospitals and reduce the growing demand for patients to be admitted to the special hospitals—that is patients who really do not require the maximum security which they provide.
I should also like to say something about the type of patient who would be cared for in regional security units, as I fear that there may be some continuing misunderstanding about this.
Such patients present severely disruptive behaviour; they may be mentally ill or mentally handicapped or may suffer from psychopathic or severe personality disorder either alone or in conjunction with mental illness or mental handicap. It is these for whom regional security units are intended. However, it is not intended that regional security units should take all patients who cause difficulties in local psychiatric hospitals or

units either by their behaviour or by occasional absconding, but only those who present such problems as to make their continuing local management impracticable in the facilities available.
I should also stress that regional security units will not be expected to cater for patients who are rightful candidates for special hospitals. They should, however, be able to cater for the type of patient who has in the past been inappropriately admitted to a special hospital because no "open" hospital was willing to accept him, even though his need for treatment was not in doubt. They will also be expected to accept some mentally abnormal offenders who have sometimes had to be given penal sentences just because they were considered to require more security than was available in the local hospital.
The other point I should especially stress is that the units will form an integral part of the psychiatric services of a region. We must be careful not to isolate them and the patients in them from the rest of the service. We need a flexible service with patients moving in and out of security as the need for close supervision arises and recedes. We hope, too, that the units will develop as centres of expertise in dealing with difficult patients and that they will be able to play an active part as a source of advice and training for the staff of the other psychiatric services in the region.
The South-West Thames Regional Health Authority's proposals have come in for some adverse publicity, and have been a matter of considerable concern to the hon. Gentleman's constituents and others—a concern which he so graphically described this morning.
Before going on to explain how the regional health authority came to propose the Royal Earlswood site and how the matter now stands, I should like to emphasise that we are talking about a proposal on which the regional health authority and the area health authority are consulting—not a firm decision or recommendation to my right hon. Friend. My right hon. Friend has not received such a recommendation. I therefore do not propose tonight to debate the merits of this proposal, which is still a matter for local consideration, but only to explain the steps by which the present


position was reached, and what are the next steps.
In response to my right hon. Friend's request, to which I referred a few moments ago, the South-West Thames Regional Health Authority set up a multi-disciplinary working party, chaired by a member of the authority. This working party drew up detailed proposals for a regional unit and also considered a number of possible sites, coming to the conclusion that land at the Royal Earlswood Hospital would be the most suitable of those available.
Obviously, there is a considerable element of judgment in any such choice, and, equally obviously, different people judge differently. The working party did, however, go into the matter very thoroughly. It selected, and included in its report, a number of criteria by which potential sites should be judged. These included geographical location in the region, the availability of suitable Crown land, the presence of good road and rail communications, the adequacy of supporting facilities on site, which could both service the unit and reduce costs, and the possibility of providing unobtrusive security at the perimeter of the unit which would be properly effective for the containment of patients requiring security. This last point is, of course, a most important one and I should like to enlarge on it a little.
It is not the intention that these units should be as secure as the special hospitals, as the patients will not constitute a comparable risk to the community. While not inhibiting patient rehabilitation, they must be sufficiently secure to enable staff to provide care and treatment without being continuously worried about custodial problems, and they must provide a degree of protection against patients wandering abroad which is acceptable in practice to the surrounding community and to the relatives of patients in the neighbouring hospital. I understand that the proposals seek to provide that. It is not envisaged that the patients of this or any other security unit would go outside the unit grounds unless escorted.
There are other criteria, too. The Butler Report recommended, and the regional health authority accepts, that it

is best to place units of this type near centres of population where they can form an integral part of a comprehensive health service. The hon. Gentleman will remember that nearly a year ago he spoke in this Chamber on the need for expansion of health facilities in East Surrey. All being well, this health district will now benefit from the first phase of a brand new hospital, probably based on the Department's "nucleus" design, which it is also proposed to build on the Royal Earlswood site. This was one of the factors which the working party took into account. In addition, there is a need to provide adequately for staff, in terms of accommodation and of nearby educational, shopping and recreational facilities.
I understand that the proposals fur siting the unit were designed to avoid ill effects on the Royal Earlswood Hospital. The unit would take up only five to eight of the 155 acres which constitute the present Royal Earlswood site, with the new general hospital taking up a maximum of another 10 acres at the other end of the site. It would have a separate access, in addition to the security arrangements which are one of its essential features.
The regional health authority accepted its working party's recommendation as a basis for consultation. It has consulted very widely other health and social service authorities, the Community Health Council, residents' associations, the Friends of the Royal Earlswood Hospital and at least 10 other organisations with which meetings have been held to explain and discuss the proposals. Among the discussions which have been held, I understand that the chairman of the working party has considered with the Director of Social Services for Surrey the increased demands which may be made on his department, both in the unit and in helping to resettle patients who are discharged. I think the House will agree that this represents very comprehensive consultation into which the regional health authority has put an unusual amount of effort. I see no evidence that the timetable has in any way prevented or inhibited the expression of views.
The hon. Gentleman said that there is a particular site in the same health district which many of those who opposed the present choice feel would be more


suitable. I welcome indications that the local approach is not merely negative but has a constructive side, too. I think I should say that the site the hon. Gentleman has in mind was considered by the working party, which thought it less suitable than Royal Earlswood. Nevertheless, I am sure that the regional health authority will be very ready to look at it again if it carries the support of the local interests and is more acceptable to the local community, and if it commends itself to the area health authority.
As I said earlier the matter still rests with the Surrey Area Health Authority and the South-West Thames Regional Health Authority. The area health authority meets today and will consider what recommendation to make to the regional health authority. In reaching its decision it will take fully into account the views expressed during consultations, including the anxieties, which I know are very real, of those who have children in the Royal Earlswood Hospital and those who feel that the unit would adversely affect the hospital's present work. I hope that the area health authority will consider the proposal which has been put forward for an alternative site. It will have to take into account possible local reaction to that site as well, and also

the likely difficulty of finding any site which will not raise objections of one kind or another.
The regional health authority will consider the area health authority's recommendation at its meeting next month. It will have a very difficult decision, as will my right hon. Friend should it be necessary for the matter to come to him. I assure the hon. Gentleman that it will not be taken lightly. But, wherever it is eventually decided to site the unit, at the Royal Earlswood or elsewhere, I hope that all concerned will bend their efforts to making it a success and not allow the legitimate concerns of our present debates to cloud its future.
Finally, I know that the health authorities are deeply aware of the loyalty and devotion of the staff, and of the value of the voluntary effort and local good will which have given the Royal Earlswood Hospital such a good name over the years. I should like to recognise those contributions tonight, and to express the confident hope that whatever happens there will be no diminution of the staff and voluntary effort which is so vital to the continued excellence of the hospital.

Question put and agreed to.

Adjourned accordingly at thirteen minutes to Two o'clock.